Additional Dwelling Unit FAQ

Additional Dwelling Unit Questions?

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Additional Dwelling Unit FAQ

What is an Additional Dwelling Unit (ADU)?
It’s a secondary or accessory structure on your property that contains living space. Additional dwelling units are great to provide flexible living space options on your property or to provide an additional income stream. An ADU can’t be bought or sold because it is a part of a single-family property. The property owner will be the same as that of the ADU.

What are the different types of ADUs?
The three main types are:

  • Living space above a detached garage
  • A tiny house or mother-in-law suite
  • A basement apartment

Can I Build an ADU on my land?
You must check with your county to determine if your property is eligible for an ADU to be built on your land. There are many different zoning requirements you must check first to determine if your property qualifies. In many counties they allow the ADU to be rented out.

In most situations, an ADU most likely won’t be allowed on a lot that contains any of the following: duplex, multi-family structures, townhomes, or apartments.

Why build an ADU in Colorado?

  • Gain an income stream via rent or Airbnb
  • To house a family member
  • Additional space for kids
  • Provide guest living space
  • Host events
  • Additional space for your at-home business

How large can an ADU be?
Check with your county on their building ordinance requirements. However, the following is a general guideline on what they might allow:

  • An attached ADU: whichever is less, 1200 square feet or 40% of the primary unit
  • A detached ADU: A lot can depend on your lot size and zoning. For example, if your lot is 1 acre or more, the ADU can be the lesser of either 1200 square feet or 40% of the primary unit.

Can I put an ADU above my garage?
As long as the ADU height is not exceeding the primary residence. There are many structural qualifications as well. We may need to scrape the garage if it’s not equipped to handle a second story addition. This can include many benefits though, including code upgrades, more energy efficiencies, better curb appeal, etc.

Should I rent out an ADU short-term or long-term?
This can vary depending on the area that you are located. Some owners decide to do a short-term rental like AirBNB initially to help quickly pay down their loan (see our financing options at or HELOC (home equity line of credit). Then they switch to a long-term rental arrangement in order to have a consistent income stream coming in. Some may even live in the ADU and then rent the primary home out.

What is the cost of an ADU in Colorado?
Whether you are converting your basement or doing a detached ADU the cost can vary dramatically depending on size and features. It can be between $45,000-$450,000. Contact us today to get a better estimate that align with your property goals. We offer financing for upto $100,000 (click here to learn more: Some people also do a HELOC when they refinance their mortgage.

If you are in West Denver, there is a pilot program where you can possibly get income assistance to build a detached ADU. It’s called the West Denver Renaissance Collaborative. Click here to see if you are in the right area to qualify:

Can an ADU increase the value of my home?
Yes! Not only does it add additional living space, it provides an option for additional income streams that many buyers nowadays like to see. It’s a great investment into your home and not only provides functionality but it also provides financial return.

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