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What is an ADU and Should I Build One?

In the picturesque state of Colorado, homeowners are increasingly exploring the potential of Additional Dwelling Units (ADUs) to enhance the value and functionality of their properties. But what exactly is an ADU, and how can it benefit you as a Colorado homeowner? Let’s jump into the ins and outs of ADUs, from their inherent benefits to the legal tape surrounding their construction, and how you can get started on this rewarding venture.

What is an ADU? ADU Styles

An Accessory Dwelling Unit (ADU) is a smaller, independent residential dwelling located on the same lot as your primary home. They come in various forms, including detached units like backyard cottages, attached units to the main house like a mother-in-law suite, or conversions of existing spaces like garages or basements​. ADUs have separate entrance access and can be rented out apart from the main home.

Benefits of Building an ADU

  1. Additional Income: By renting out your ADU, you can generate a steady stream of income which can be a financial game changer.
  2. Increased Property Value: ADUs contribute to increasing the overall value of your property, making it a wise investment for the future​​.
  3. Housing Flexibility: ADUs offer housing flexibility allowing for aging in place, or accommodating family members like adult children or caregivers​​.
  4. Expanded Living Space: Whether you need a home office, a guest house, or a space for a growing family, an ADU provides that extra space tailored to your needs.

Legal Framework

Colorado is quite progressive when it comes to ADU construction, actively encouraging homeowners to explore this option. However, the regulations can vary significantly from one neighborhood and city to another. Some common requirements across the state include having independent facilities such as a bathroom, kitchen, and some form of living space in the ADU.

It’s crucial to consult with your local city or county offices to understand the specific regulations applicable to your property. You can start by finding out your Assessor’s Parcel Number (APN) and checking the local zoning laws​. For example, Denver county has ADU information and a helpful tool to search if your area allows for ADUs.

Financing Your ADU Project

Budgeting is a vital step in your ADU project. Aside from construction costs, consider utility connections, furnishings, and landscaping. One financing route is leveraging your home’s equity to build the ADU, which upon completion, not only increases your property’s value but also provides a means for wealth building through rental income or added living space​​. If you’d like to explore your financing options, schedule a time to chat with our experts.


Embarking on an ADU project is a promising venture with both financial and lifestyle benefits. By understanding the legal framework and financial implications, you are well on your way to making an informed decision. We are here to assist you in navigating the financial aspect of your ADU project. Reach out to us for personalized financial solutions to make your ADU plans come to life.

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