Accessory Dwelling Unit

Accessory Dwelling Units (ADUs) are secondary housing units which are located on the same lot as a primary residence. ADUs offer additional living space or rental income opportunities. These units can be attached to, or can be detached from, the main house, and are often referred to as “in-law suites,” “granny flats,” or “secondary suites”.

Purpose:
ADUs provide housing for family members, generate rental income, or offer a space for downsizing homeowners. Types:
ADUs can be internal (within an existing structure, like a basement or attic conversion), attached (as an addition to the main house), or detached (a separate structure on the property, such as a garage conversion or a new cottage). Benefits:
ADUs can also help address housing shortages, offer affordable housing options, increase property values, and provide flexibility for multi-generational living (my favorite). Regulations:
ADUs construction is not free for all and for safety reason are subject to local zoning regulations and building codes. In Massachusetts, this new state laws has made it easier to build ADUs by reducing permitting requirements but NOT eliminating building code. Cost:
Personal choice on return. According to Boston.gov, building an ADU can range from price typically in range of $75,000 to $350,000 or more, depending on the type and size. At some point, it is not worth spending much more that affects house value with little to no marginal returns.

As an Investment

The ADU law applies to investment properties also. The law does allow homeowners to create ADUs, which can be rented out, even if the owner doesn’t live on the property, in either the primary dwelling or the ADU. This is big Investment opportunity too because it means that investors can add an ADU to a single-family home they own and then rent it out, which effectively creates a two-unit rental property; perhaps a significant and potential opportunity for higher income for real estate investors to now expand their rental portfolios by adding ADUs to existing properties, increasing their number of rentable units without needing to purchase a separate multi-family building.

Compliance with regulations:
Once again, while the law allows for ADUs on investment properties, it’s crucial for owners to ensure compliance with all relevant regulations, including size restrictions, building codes, and zoning requirements. Always talk to the town the property is in to find out other applicable requirements, if any. Short-term rental restrictions:
Owners will have to check with their town rules for compliance on length of rentals. While long-term rentals are generally permitted, short-term rentals (like Airbnb) may have additional restrictions. However, in many cases, ADUs are permitted “by-right” in zoning districts where single-family homes are allowed. This means that they don’t require a special permit even if the principal residence may require a special permit.

Interested in more, here is a link to a well written article: Accessory Dwelling Units New MA Law Change on Feb 2, 2025