Accessory dwelling unit (ADU)
A second, smaller home on the same lot as a main house, such as a garage apartment or backyard cottage. Local zoning decides whether you can build or rent one.
Also called: ADU, granny flat, in-law suite, casita, backyard cottage
Related terms
Local rules that control how land can be used, such as residential, commercial or mixed use, plus limits on density, height and setbacks. Zoning affects what you can build or rent.
Living in one part of a property and renting out the rest, such as other units, rooms or an ADU, to offset housing costs. It often lets buyers use owner-occupied loans with lower down payments.
Local government approval for construction, additions, or major system work. Unpermitted work can cause problems with appraisals, insurance, and resale.
Real estate bought to rent to tenants for income rather than to live in. Lenders, insurers and tax rules treat it differently from a primary residence.