Maybe you’ve heard of an Accessory Dwelling Unit (ADU), maybe not. They’re defined as a room or set of rooms in a single-family home, in a single-family zone that has been designed or configured to be used as a separate dwelling unit and has been established by permit. Essentially an income generating unit on your current property.

ADUs are becoming more and more popular. Affordable housing in the Twin Cities can be difficult to find. An analysis was done by the Met Council’s Community Development Unit, and, according to a Star Tribune article, “Even with the recent construction recovery, the Twin Cities remains woefully short of the levels of new housing production needed to satisfy the demands of a growing population, especially relative to peer markets across the country. The measure used by the Met Council researchers was to compare the rate of housing growth to that of population growth across 12 popular U.S. markets. By that metric, the Twin Cities ranked behind only San Francisco and Atlanta in the failure of new housing production to keep pace with population growth — the latter led the former by 43 percent locally. San Francisco was 59 percent behind, while the Atlanta market was 49 percent behind. In contrast, Chicago and Pittsburgh were the only two markets where housing growth actually outpaced that of the population.” 

Currently, the vacancy rate in the metro area is 4 percent. With 5 percent generally being accepted as the industry standard for a balanced housing market, the researchers determined an additional 13,400 units would be needed immediately to reached “balanced” status - a level of extra housing production roughly equal to a typical year’s entire output. 

So what does this all mean? It mean’s there’s great potential to set up an Accessory Dwelling Unit on your property and make some money! You can have an Interior Attached ADU, an Attached ADU via addition, or a Detached ADU. 

An Interior Attached ADU would be something like a basement or back side of your home, or a building within 6 feet of the principal residence. Typically ADUs will have a living space, kitchen, bedroom, and bathroom. An Interior Attached ADU via addition would be an added part of the home, again having basic living area, kitchen, bedroom, and bathroom. A detached ADU can also be built, but there are a few more regulations with those. In Saint Paul, the lot size must be at least 5,000 sq feet (about .12 acres) and there must be a sidewalk going to the unit. If you build an ADU above a detached garage, that would be considered a detached ADU. In both Minneapolis and Saint Paul, only one ADU is allowed per property and the owner of the property must live in one of the dwellings. 

Of course, there can be a significant cost to building an ADU, but with average rent in the Twin Cities over $1,000 for a one bedroom apartment and demand being high, the cost can be recouped quickly. There are several ways to make this work through using the current equity in your home and contractors that we work with.

We would love to talk to you about your ideas for an ADU and go through the specifics for the area you live in. Contact us today with any questions you have!

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