What States Allow ADUs? (ADU Guide)

I’ll be the first to tell you that once you become a real estate investor, you never stop looking for deals or additional real estate methods to boost your income. 

For example, you may focus on fixing and flipping, but you can do wholesaling on the side for extra cash. 

Or, you may have an impressive portfolio of rental properties, but if you come across a wholesale or fix and flip deal, it may be hard to pass up. 

Compared to these methods, there’s actually another lesser known way to make money as a real estate investor. 

What if we told you that you could create another source of income using your current real estate investment property? 

It’s called an ADU — accessory dwelling unit. 

ADUs come with tremendous upside, but because of strict regulations, there are only certain states that allow them.  

If you’re ready to learn everything you need to know about ADUs, including which states allow them, let’s get started! 

What are ADUs? Understanding Accessory Dwelling Units (ADUs)

Known as granny flats, in-law units, or backyard cottages, accessory dwelling units are secondary housing units either attached attached to or located on the same property as a primary residence.

ADUs are self-contained living units that include:

• a kitchen
• bathroom
• separate entrance
• 1-2 bedrooms

These units can be located within a single-family home, as a separate back or front yard structure on the property, or even converted from existing structures such as garages or basements.

By adding another separate living space, you can rent it out to additional tenants to increase your monthly cashflow.

ADUs are typically limited in size, often ranging from around 400 to 1,200 square feet, depending on local regulations.

ADUs have gained popularity in recent years as a solution to lack of housing in many urban areas. In the context of real estate investing, they are another way for you to add an additional stream of income — that is, if your state allows ADUs.

Some states, like California and Oregon, have embraced ADUs legislation, while states like North Dakota and Alaska have regulations prohibiting it.

So...

What States Allow ADUs?

Here are the following states that allow ADUs.

• California
• Arizona
• Texas
• North Carolina
• Florida
• Maine
• Washington
• Oregon
• Minnesota
• Hawaii
• West Virginia (as long as the ADU doesn’t exceed 1,700 square feet.
• Wisconsin (as long as it follows the size limitations set forth by the state)

The Bottom Line: ADUs

If you haven't heard of them before, ADUs can be yet another way to boost your income as a real estate investor now and in the future.

Looking for more ways to earn additional money as a real estate investor through unique and up to date strategies? Check out our guide the best books for real estate investors to read today.

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