Is Building a DADU a Good Investment?

You may be wondering, what is a DADU? Also known as a Detached Accessory Dwelling Unit (DADU), DADUs are detached small homes with a sleeping area, a bathroom, a kitchen, and living quarters, typically built on plots with single-family homes. DADUs are usually newly constructed. But sometimes, homeowners opt to convert a garage or another outbuilding into a habitable living space.

A DADU can be up to 800 feet and is situated a fair distance from the land plot’s primary house and the neighbors to allow for privacy. Especially in cities like Nashville, DADUs are becoming increasingly popular for family members to dwell in or to rent out for another stream of income. A DADU may also be called a backyard cottage, and many individuals enjoy the quaint appearance of a smaller home unit for a short-term rental or a separate in-law quarters.

A big question that many homeowners have when it comes to building a DADU is whether or not it is a good investment. The short answer is—it depends. Why are you considering building a DADU in the first place?

If you’d like to house your aging parents and don’t want to foot the cost of a retirement home, a DADU may be a great investment for you! On average, retirement homes cost $45,000 a year. By paying for the mortgage of a backyard cottage instead of handing over your parents’ bank accounts to a retirement community and never seeing the money again, investing in a DADU may be a good option for you. You also may want to consider building a DADU to house yourself after your retirement if you plan on passing your home along to one of your family members.

Building a DADU may be smart if you’re looking to enhance the value of your home and increase your streams of income. Assuming that your zoning regulations allow you to legally build a DADU, you can build a second building with livable space on your existing property. As long as it’s clearly smaller than the principal building on the plot. This building can act as an apartment to rent out or even a home office.

Still, you should always take your budget and zoning regulations into consideration before deciding to build a DADU. If your zoning regulations won’t allow you to build a DADU big enough to serve the purpose you want to use it for, it’s not worth it. Additionally, if a DADU comes as an inconvenient cost to you and you don’t have the budget for it (or the plans to make income from it to pay it off), it’s probably not worth it.

Are you considering building a DADU? Contact The Dan Company at (615) 395-6910 to discuss the logistics of a DADU project and determine if it’s a good investment for you. We offer additions, renovations, and remodeling projects across the Greater Nashville area.