Backhouse, guest house, pool house, granny flat — all nicknames for a simple and powerful tool of personal wealth-building: the accessory dwelling unit, or ADU.
In a nutshell, an ADU is an additional building, a small home built on a property upon which a single-family dwelling already exists.
The Municipal building code in Ontario defines ADUs as follows:
An attached or detached dwelling unit with complete independent living facilities for one or more persons, that includes permanent provisions for living, sleeping, eating, cooking, and sanitation on the same lot in which an existing principal single-family dwelling is situated.
There are a few different types of accessory dwelling unit you can build, but we’ll save the technical talk for a little later on. For now, let’s focus on the benefits of building an ADU.
Benefits of Owning ADUs
First and foremost, building an accessory dwelling unit is a great way to provide yourself with an additional source of income.
Whether you are trying to sock away some savings for a rainy day, save for retirement or education costs, or simply boost your cash flow and upgrade your lifestyle, building an ADU on your property could be a smart addition to your financial game plan. For those seeking a hands-off investment, management can be outsourced to a property management company, creating truly passive income.
As an added bonus, building an ADU can increase your property value, especially if you live in a high-demand area where renters are congregating.
On that note, ADUs are also a socially responsible rental option and an important piece of the puzzle when it comes to solving the housing affordability crisis in Ontario. Renters are desperate for solutions, and accessory units increase rental property density in neighborhoods, offering an affordable alternative for small families and single renters while providing additional income for the local economy instead of large corporations.
Before you start, decide what type of ADU is right for your needs.
Types of Accessory Dwelling
Ontario building code stipulates three different designations for ADUs: Standard ADUs, Integrated ADUs, and Efficiency Dwelling Units — a subtype of Integrated ADUs. Windsor residents have slightly different regulations that can be consulted here: Additional Dwelling Units/Second Residential Units
Standard ADUs
Independent living units that can be attached or detached from the main single-family residence. A standard ADU must have its own bathroom and living space. The ADU may not exceed 50% of the main residence’s square footage and may not exceed 850 square feet if the main residence is more than 1700 square feet. Additionally, the standard ADU must comply with all building codes the main residence is under unless specifically exempted in the ADU code.
Integrated ADUs
Similar to the Standard ADU, except that the unit is allowed to share living space. They are subject to the same size restrictions as a Standard ADU and must also meet all codes the main residence is under. The integrated ADU must also have independent exterior access to the unit.
Efficiency Dwelling Units
These dwelling units consist of a single multipurpose room serving as living, dining, and sleeping quarters, accompanied by a private bathroom. They can be as small as 150 square feet but the bathroom must be in its own room. The kitchenette must have refrigeration, counter space, and cabinets relative to the unit’s size. Occupancy for these units is capped at two individuals.
Zoning Laws and Other Restrictions1
Before building an ADU though, it’s important to look into zoning laws and local regulations.
If you’re in Windsor, Ontario, here’s a breakdown of where ADUs are permitted in Windsor and the most common restrictions that may apply:
- Areas / Property Types: ADUs are typically allowed in residential areas including single detached, semi-detached, duplex, and townhome/rowhouse dwellings, and accessory buildings. However, they’re not permitted in configurations like double duplexes or multiple dwellings.
- Floodplain Regulations: ADUs are prohibited in basements within floodplain areas. Consult the linked map by ERCA for regulated zones and contact their General Enquiries line if clarification is needed.
- Basement Units: Outside of floodplains, basement units may be allowed with specific flood mitigation measures like disconnected downspouts and sump pumps.
- Parking Requirements: Generally, an additional parking space is required for an ADU, except in transit-served older core areas. No extra space is required for a second ADU on a lot.
- Heritage Property Restrictions2: Properties on the Municipal Heritage Register or within heritage areas have restrictions on visible exterior alterations for ADU additions. Contact the Heritage Planner for guidance.
Other requirements and restrictions do apply though — more information about specific restrictions in Windsor can be found on the City of Windsor’s website.
Extra Quality of Life Considerations3
While complying with the Building Code and Municipal/Provincial by-laws ensures minimum standards, consider additional measures to enhance comfort.
- Heating and Ventilation: Installing a separate furnace and ducts for each unit can prevent cooking smells, recreational smoke, and other odours / noise from transferring between the units. Sharing a single thermostat between both units would also be a constant annoyance for both units.
- Further Noise Reduction: Incorporating extra noise insulation in walls, floors, and ceilings can further mitigate noise transmission between units. Various construction techniques, such as additional insulation or multiple layers of drywall, can also effectively reduce noise transfer.
- Enhanced Fire Protection: Consider exceeding fire separation requirements. Investing in additional fire-resistant materials or incorporating advanced fire suppression systems can provide greater protection for occupants in the event of a fire.
- Addressing Security Concerns: Installing robust door locks, outdoor lighting, and external security systems can help to address residents’ security concerns. Collaborating with local law enforcement or security experts can provide valuable insights into effective security measures for the specific area.
- Community Integration and Amenities: Integrating community amenities and green spaces to foster a sense of community and promote environmental consciousness.
So, how do you get started? We’re glad you asked. Let’s jump into the do’s and don’ts of the ADU life as we discuss how much it costs to build an ADU.
Cost of Getting an ADU on Your Property
First, you will need to get your project approved by your municipality. Nothing will mire your project more quickly than permitting and legal issues. Be sure to dot your i’s and cross your t’s before delving into the construction and design processes.
To minimize hassle and potential legal issues, we recommend contracting construction professionals or having a prefabricated ADU installed on your property. This could save you thousands in maintenance and legal fees down the road.
How Much Does it Cost to Buy an ADU
Many reputable and affordable companies offer prefabricated ADUs. These range in price from $33,000 CAD to around $125,000 CAD. Depending on your needs and the renters you want to attract, opting for a prefab ADU could be the most efficient investment of your time and money as it will eliminate the need for you to oversee the project and ensure that you receive a certified standard of quality and service.
How Much Does it Cost to Build an ADU
The construction costs for an additional building or accessory unit can cost anywhere from $20k to $500k depending on the size, materials quality, and construction methods used.
Hiring local professionals to design and build your ADU may be the way to go in terms of cutting costs or if you are looking for a customized ADU process. There are services that will connect you to approved contractors who build ADUs. You can use these services to find a contractor who perfectly matches your needs and budget.
Maximizing Income
Now that we’ve discussed the do’s and don’ts of the building process, let’s jump into the fun part: making money with your new ADU.
Marketing Your Rental Property
To start generating income from your Accessory Dwelling Unit (ADU), you need tenants. Marketing your rental property effectively is crucial. This can involve spreading the word among your social circle or listing your ADU on local apartment listing websites. The level of involvement you choose in this process depends on your preferences and availability.
Pricing Your Rental Efficiently
When it comes to pricing your ADU rental, the size, amenities, and quality of the ADU should be reflected in the rental price. Additionally, compare the rental rates of similar properties in your area to ensure your pricing is competitive yet reflective of the added value the ADU provides.
Property Management
Like with the building process, it’s up to you how involved you want to be.
Opting to hire a property manager can streamline the rental process and provide peace of mind. A management company can handle tasks such as lease-up, maintenance, and tenant management — this not only saves time but also reduces the risk of legal issues arising.
The expertise of management companies extends beyond skills and experience; they also have access to advanced technology and resources that enable comprehensive tenant screening. This capability enhances the quality of tenants attracted to your property.
When selecting a property management company, ensure they are reputable and offer fair terms. Seeking a second opinion on any agreements can provide clarity and confidence in your decision-making process.
Feel free to reach out to us for further evaluation or assistance with your rental property management needs.
Sources
- City of Windsor: Additional Dwelling Units
- City of Windsor: Heritage Planning
- Ontario.ca: Add a second unit in your house
- Dwell.com: 7 ADUs You Can Buy Right Now for Less Than $100,000 (August 19th, 2020)
