Whether you are looking for more space to house extended family members, a source of rental income or a little retreat away from your main house, there’s something that may be your perfect solution: an accessory dwelling unit.

There are so many reasons to build an ADU on your house’s property (or even convert an existing structure into one), and having one could even wind up saving or making you money in the long run.

And as of late, more and more families are considering ADUs, according to mortgage lending company loanDepot.

To learn more, we spoke with home financing expert Romina Zamanpour, Director of Production Operations at loanDepot. Zamanpour knows a thing or two about home trends—in 2025, she was named company’s No. 1 Direct Loan Officer as well as the No. 2 Direct Loan Officer in the U.S.

And according to Zamanpour, there are a few things you should consider before building an ADU on your property. Keep reading for her tips and to learn more about ADUs.

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More Families Are Building ADUs on Their Properties

According to loanDepot research, more and more families are building accessory dwelling units on their properties.

An accessory dwelling unit, also known as an ADU, refers to a second, smaller housing unit structure on the same property as a main house, as explained by Building an ADU. Depending on what it’s used for, some people also call an ADU a guest house, cottage, granny flat, casita or laneway house.

Some people build an ADU from scratch, while others convert existing structures like freestanding garages or sheds into ADUs. You can even turn a basement or extra wing of your house into an ADU, while others use a shipping container house as an ADU.

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Why More Families Are Building ADUs on Their Properties

“With housing costs rising and affordable homes in short supply, it is easy to understand why more families are turning to ADUs to help bridge the housing gap,” Zamanpour tells Parade.

An ADU allows extended family members to “live just a stone’s throw away while still preserving everyone’s privacy and independence,” she explains. “It can also give families the extra space they need without requiring anyone to relocate or purchase a larger home. Think of an ADU as a space that can change chapters along with your family, serving one purpose today and another several years from now.”

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ADUs Are a Brilliant Solution for Multigenerational Families

Most prominently, ADUs can work really well for multigenerational families.

“They offer the best of both worlds: loved ones can stay close without everyone living under the same roof,” Zamanpour says. “An ADU can give you a built-in family support system, keeping loved ones close while giving each generation the privacy and independence they need.”

Many families use ADUs for aging parents.

“For aging parents, an ADU can be designed to support aging in place, giving them a comfortable home of their own with family just steps away,” explains Zamanpour. “That can provide peace of mind and may help families manage certain caregiving expenses.”

ADUs are also a great solution for adult children who can’t afford their own place yet.

“For adult children, an ADU can offer some much-needed independence while giving them time to strengthen their finances and save toward future goals, including buying a home,” Zamanpour says. “They may also be able to contribute to household expenses.”

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ADUs Can Be More Than Just Small Homes for Family Members

“An ADU can be a bit like a Swiss Army knife for your property because it can serve many different purposes over time,” says Zamanpour. “The beauty of an ADU is that it does not have to do the same job forever. It can generate rental income today, become your personal retreat tomorrow, or give visiting family a place of their own down the road.”

An ADU can make a great rental property or guest house.

“You might use it as a rental property, creating additional income that can help offset the cost of building and maintaining the space,” Zamanpour suggests. “And when family or friends visit, an ADU can give them a comfortable place of their own while giving everyone a little breathing room.”

You can even use your ADU as an office or retreat.

ADUs don’t have to be homes—they can also be little getaways from the hustle and bustle of your main house.

“You could also turn it into a quiet, dedicated workspace away from the activity of the main house, a home gym or wellness room or even a cozy reading retreat where you can close the door and get lost in a good book,” says Zamanpour.

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How Much Does It Cost to Build an ADU?

The price of building an ADU can vary greatly, depending on whether you’re converting an existing structure or building one from scratch, how big the structure will be, what materials you use and many other factors.

In general, SelfStorage.com reports that ADU construction typically amounts to between $150 and $300 per square foot.

More specifically, turning your garage into a small ADU could range from $80,000–$150,000, building an attached ADU might cost somewhere from $150,000-$300,000 and building a brand-new structure for an ADU could come to a total of $200,000–$400,000, according to SelfStorage.com.

That said, for many families, these costs can be lower than other housing options, and even be profitable investments in the long run. “An ADU can provide the space your family needs, potentially at a lower cost than purchasing another property,” says Zamanpour.

Plus, if you use your ADU as a rental home, you will eventually make rental income—and in the long run, you could add to your property’s value.

“Depending on your property and local market, there’s a good chance that an ADU will increase your home’s value and help you build additional equity over time,” says Zamanpour. “It can become part of how you build household wealth and create lasting value for the next generation.”

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What to Know Before Building an ADU

Before you build an ADU, Zamanpour recommends thinking hard about how you want to use the space, both in the short term and the long term. Maybe it’s just going to be a home office for now, but in the future, you’ll want it to be a grandparent’s residence—so you should consider accessibility features that accommodate aging in place.

You should also consider finances from the beginning. “If you have built substantial equity in your home, you may be able to put it to work through a home equity loan or HELOC rather than leaning on higher-interest credit cards or personal loans,” she explains. When considering your financing options, she also advises speaking with a “trusted mortgage professional who can walk you through your options and help you understand the rates, costs and monthly payments associated with each.”

It’s also important to research logistics, such as local zoning and permitting requirements. “Those rules can shape what you are able to build and affect both your timeline and overall cost,” Zamanpour notes. “Even the best-laid construction plans can encounter surprises, so make sure you leave a cushion in your budget.”

Up Next:

Sources:

• Romina Zamanpour, Director of Production Operations at loanDepot.
• What is an ADU: Accessory Dwelling Units explained. Building an ADU.
• ADU Construction Cost Guide: 2026 Pricing & Budget Tips. SelfStorage.com.