If you’re a homeowner with a decent-sized lot, an ADU can increase your property value and allow you to earn some extra income.
Demand for housing has been steadily rising for years. Unfortunately, the supply hasn’t been able to keep up. That’s why many states are making it easier for homeowners to develop and rent out Accessory Dwelling Units, also known as ADUs.
In this article, we will examine each state, their general stance on ADU development, any notable regulations, and how much you can expect to earn through rental income.
If you’re asking yourself, “Is building an ADU right for where you live?” That’s the question we’re here to answer. The first step? Deciding whether paying the upfront building costs–like the cost of a permit–is feasible within your current budget.
Alabama
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Detached ADUs are generally prohibited, so specific permit costs aren’t generally applicable. However, in cities that allow attached ADUs, permit costs range from $500 to $1,500
- Notable Regulations
- Strict zoning laws widely prohibit detached ADUs. Birmingham is one of the few cities that allows them.
- Rental Income Potential: $900-$1800 per month
Alaska
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Permit costs vary by municipality; in Anchorage, fees range from $1,000 to $3,000
- Notable Regulations
- Anchorage encourages ADU development to increase housing availability
- Rental Income Potential
- $1,500 to $2,500 per month
Arizona
- ADU Friendliness:
- Very ADU-Friendly.
- Permit Costs:
- Permit costs vary by city; for example, Phoenix charges approximately $1,500 to $2,500 per permit.
- Notable Regulations:
- Recent legislation requires certain municipalities to adopt regulations allowing ADUs on any lot where a single-family dwelling is permitted.
- Rental Income Potential
- $1,000 to $1,800 per month
Arkansas
- ADU Friendliness
- Not ADU-Friendly.
- Permit Costs
- Detached ADUs are mostly not permitted. However, those attached ADUs that are permitted often require a $500-$1,500 permit.
- Notable Regulations
- Little Rock allows attached ADUs but limits their size to 25% of the primary home.
- Rental Income Potential
- $500-$1000 per month
California
- ADU Friendliness
- Very ADU-Friendly.
- Permit Costs
- Permit costs vary by city. In Los Angeles, fees range from $1,400 to $8,000.
- Notable Regulations
- State laws have been updated in California to encourage ADU development, including reduced parking requirements and expedited approval processes.
- Rental Income Potential
- $2,000 to $3,500 per month
Colorado
- ADU Friendliness
- Moderately ADU-Friendly.
- Permit Costs
- Notable Regulations
- Recent legislation introduced a grant program to assist homeowners in building ADUs in Colorado
- Rental Income Potential
- $1,500 to $2,500 per month
Connecticut
- ADU Friendliness
- Moderately ADU-Friendly.
- Permit Costs
- Permit costs vary by city. Hartford, for example, charges around $1,200 to $2,500 for a building permit.
- Notable Regulations
- Connecticut legislation encourages flexible ADU regulations.
- Rental Income Potential
- $1,200 to $2,200 per month
Delaware
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Permit costs anywhere from $1,000 to $2,000
- Notable Regulations
- Senate Bill 23, enacted in 2024, allows property owners to construct at least one ADU on a lot with a single-family dwelling without requiring public hearings or variances.
- Rental Income Potential: $1,000 to $1,800 per month
Florida
- ADU Friendliness:
- Moderately ADU-Friendly.
- Permit Costs
- Miami charges approximately $1,500 to $3,000 for an ADU construction permit.
- Notable Regulations
- Florida Statute §163.31771 authorizes local governments to adopt ordinances that permit ADUs in areas zoned for single-family residential use, provided there is a recognized shortage of affordable rental housing.
- Rental Income Potential
- $1,200 to $2,500 per month.
Georgia
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- The ADU permitting process can cost approximately $500-$1,500 in total.
- Notable Regulations
- Atlanta allows ADUs but requires special zoning approval in some residential districts.
- Rental Income Potential
- $900 – $1,800/month, depending on location.
Hawaii
- ADU Friendliness
- Very ADU-Friendly.
- Permit Costs
- Honolulu charges $1,500 to $3,000 for ADU permits.
- Notable Regulations
- The Ohana Dwelling Unit program promotes ADUs but limits occupants to family members or long-term renters.
- Rental Income Potential
- $1,800 to $3,000 a month.
Idaho
- ADU Friendliness
- Moderately ADU-Friendly.
- Permit Costs
- Boise charges $1,200 to $2,500 for accessory dwelling unit permits.
- Notable Regulations
- Boise recently updated zoning laws to allow ADUs on lots as small as 5,000 square feet.
- Rental Income Potential
- $1,000 to $2,000 per month.
Illinois
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Generally, ADUs are not permitted in Illinois, but in Chicago’s pilot zones, permit fees range from $2,000 to $4,500.
- Notable Regulations
- Chicago introduced a pilot program that authorizes ADU construction in five zones, with a maximum size of 700 square feet.
- Rental Income Potential
- $1,200 to $2,400 per month, depending on city.
Indiana
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Permit fees range from $500-$1,500 in areas where ADUs are permitted.
- Notable Regulations
- Indianapolis allows ADUs but requires a minimum lot size of 7,500 square feet.
- Rental Income Potential
- $1,000 to $2,000 per month
Iowa
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Des Moines charges $1,000 to $2,000.
- Notable Regulations
- ADUs must be at least 300 square feet but no larger than 40% of the main home.
- Rental Income Potential
- $800 to $1,500 per month
Kansas
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Detached ADUs are generally not allowed, so permit fees are not applicable.
- Notable Regulations
- Lawrence allows ADUs but requires the homeowner to live on-site.
- Rental Income Potential
- $900 to $1,800 per month
Kentucky
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Detached ADUs are generally not permitted, but some local fees hover between $500 and $1000.
- Notable Regulations
- Rental Income Potential
- $1000-$1800 per month
Louisiana
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- New Orleans charges between $1500-$3000 for ADU permits
- Notable Regulations
- New Orleans caps ADU sizes at 800 square feet. Historic districts, on the other hand, are more lenient.
- Rental Income Potential
- $1200-$2000 per month
Maine
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Portland charges between $1000 to $2500 for an accessory dwelling unit permit.
- Notable Regulations
- LD 2003 requires municipalities to allow at least one ADU per single-family lot statewide.
- Rental Income Potential
- $1000 to $1800 per month
Maryland
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Baltimore chargers around $1200-$2500 in permitting fees.
- Notable Regulations
- The state requires local jurisdictions to allow one ADU per lot by right, but HOAs can impose restrictions.
- Rental Income Potential
- $1200-$2200 per month
Massachusetts
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Permitting costs range from $1500 to $3500
- Notable Regulations
- Ann Arbor allows ADUs but requires additional off-street parking for each accessory dwelling unit.
- Rental Income Potential
- $1200-$2000
Minnesota
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Anywhere from $500 to $1500
- Notable Regulations
- Minneapolis eliminated single-family zoning in 2018, enabling the construction of more ADUs.
- Rental Income Potential
- $1200-$2200
Mississippi
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- The cost of an ADU permit averages around $500 to $1500.
- Notable Regulations
- Only attached ADUs are allowed in Mississipi. Of those that currently exist in MS, most share utility connections with the main house.
- Rental Income Potential
- $900-$1700
Missouri
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Kansas City and St. Louis charge around $1000-$2500 for ADU Permits
- Notable Regulations
- Kansas City mandates that ADUs be built behind the main home. In St. Louis specifically, ADUs are subject to a maximum limit of 800 square feet.
- Rental Income Potential
- $1000-$2000 per month
Montana
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Fees vary by City. Missoula currently charges around $1200-$2500.
- Notable Regulations
- Statewide law requires all cities to allow ADUs in single-family zones
- Rental Income Potential
- Monthly earnings of $1000 to $2000 are common in popular cities like Missoula.
Nebraska
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Detached ADUs are not permitted in most municipalities. Therefore, an ADU permit cost is not applicable in Nebraska.
- Notable Regulations
- Lincoln allows ADUs but requires a special-use permit and a minimum lot size of 7,000 square feet.
- Rental Income Potential
- $900 – $1,800/month
Nevada
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Las Vegas and Reno charge $1,500 to $3,500 for ADU permits.
- Notable Regulations
- A statewide law (2023) requires all counties with over 100,000 residents to permit ADUs on single-family lots, but HOAs can still prohibit them.
- Rental Income Potential
- $1,500 to $3,000/month
New Hampshire
- ADU Friendliness: Very ADU-Friendly
- Permit Costs
- Concord and Manchester charge $1,000 to $2,500.
- Notable Regulations
- State law (SB 146) requires cities to allow ADUs by right on any residential lot but caps their size at 750 square feet.
- Rental Income Potential
- $1,200 to $2,400 per month
New Jersey
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Permit fees range from $1,500 to $4,000
- Notable Regulations
- Princeton and Montclair allow ADUs but require owner occupancy
- Rental Income Potential
- $1,500-$3,000 per month
New Mexico
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Albuquerque charges $1,200 to $2,500 for an ADU permit.
- Notable Regulations
- ADUs must be at least 300 square feet but are not to exceed 50% of the primary home’s size.
- Rental Income Potential
- $1,200-$2,200 per month
New York
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- New York City permits average around $3,000 to $6,000 and err on the lower end of the spectrum for upstate cities.
- Notable Regulations
- NYC allows accessory apartments, while some areas of Long Island prohibit them
- Rental Income Potential
- $2,000 to $4,500 per month
North Carolina
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Raleigh and Charlotte charge anywhere from $1,200 to $2,500
- Notable Regulations
- Some cities, like Asheville, have lifted owner occupancy requirements for ADUs to encourage ADU development.
- Rental Income Potential
- $1,200-$2,500 per month
North Dakota
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- The average ADU permit cost is around $500 to $1,500.
- Notable Regulations
- Fargo allows attached ADUs with a 400-square-foot limit
- Rental Income Potential
- $800-$1,500
Ohio
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- The cost of an ADU permit is between $1,000 and $2,500.
- Notable Regulations
- Minimum lot size requirements
- Rental Income Potential
- $1,000-$2,000 per month
Oklahoma
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- $500-$2,000
- Notable Regulations
- Tulsa requires a minimum of 10,000 square feet per lot
- Rental Income Potential
- $900-$1,800 per month
Oregon
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Portland charges $1,500 to $3,500 for an ADU permit.
- Notable Regulations
- Rental Income Potential
- $1,500-$3,000
Pennsylvania
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Permitting costs are between $1,000 and $2,500.
- Notable Regulations
- Some cities only allow ADUs as ‘Caretaker Units’
- Rental Income Potential
- $1,200-$2,500 per month
Rhode Island
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Providence charges $1,200 to $2,500.
- Notable Regulations
- State law (HB 2022-6606) mandates that all single-family lots allow one ADU by right.
- Rental Income Potential
- $1,400 – $2,800/month, depending on location.
South Carolina
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Charleston charges between $1,500 to $3,000 for an ADU permit.
- Notable Regulations
- Some cities require that ADUs match the main home’s architectural style and impose strict height limits.
- Rental Income Potential
- $1,200 – $2,400/month
South Dakota
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs: When ADUs are permitted, permit costs will range from $500 to $2,000.
- Notable Regulations
- Sioux Falls allows attached ADUs only and requires them to be less than 30% of the primary home’s size.
- Rental Income Potential
- $800 – $1,500
Tennessee
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Permit costs range from $1,200 to $3,000.
- Notable Regulations
- Nashville allows ADUs but requires owner occupancy and limits short-term rentals in many zones.
- Rental Income Potential
- $1,200 – $2,400 per month
Texas
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- ADU permit cost ranges from $1,500 to $3,500.
- Notable Regulations
- Austin allows up to two ADUs per lot. In 2022, minimum lot size requirements for ADUs were lifted.
- Rental Income Potential
- $1,500 – $3,000/month
Utah
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Salt Lake City charges $1,200 to $2,500.
- Notable Regulations
- State law (HB 82) prohibits cities from banning internal ADUs in single-family zones but allows them to regulate detached ADUs.
- Rental Income Potential
- $1,400 – $2,800/month, depending on location.
Vermont
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- In areas where permits are required, fees range from $1,000 to $2,500.
- Notable Regulations
- State law (Act 179, 2020) allows ADUs up to 900 square feet on any residential lot without special permits.
- Rental Income Potential
- $1,200 to $2,400/month
Virginia
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Richmond and Arlington charge $1,200 to $3,000.
- Notable Regulations
- Some cities require additional parking spaces for ADUs, and detached units are often capped at 750 square feet.
- Rental Income Potential
- $1,400-2,800
Washington
- ADU Friendliness
- Very ADU-Friendly
- Permit Costs
- Seattle charges $1,500 to $3,500 for an ADU permit.
- Notable Regulations
- State law (HB 1337, 2023) requires all cities to allow two ADUs per lot and prohibits owner-occupancy requirements.
- Rental Income Potential
- $1,800 to $3,500
West Virginia
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- Permitting costs average around $500 to $1,500.
- Notable Regulations
- Only a few cities, like Charleston, allow attached ADUs, and they must be occupied by family members or caregivers.
- Rental Income Potential
- $800 – $1,500/month, depending on the city.
Wisconsin
- ADU Friendliness
- Moderately ADU-Friendly
- Permit Costs
- Madison and Milwaukee charge $1,200 to $3,000.
- Notable Regulations
- Madison allows ADUs up to 800 square feet and has since removed any ADU-specific parking requirements (as of 2022).
- Rental Income Potential
- $1,200 to $2,500 per month
Wyoming
- ADU Friendliness
- Not ADU-Friendly
- Permit Costs
- The cost of an ADU permit is between $500 and $2,000.
- Notable Regulations
- Jackson is one of the few cities that allow ADUs, but it limits the size of an ADU to 650 square feet and is only permitted for long-term rental use.
- Rental Income Potential
- $1,500 – $3,000 per month
What Other ADU Costs are Associated with Building?
With building permit fees, impact fees, school district fees, city fees, and other permit-related fees, the total project cost includes a combination of different expenses and soft costs.
Here are the key factors that influence the overall cost.
Site Preparation Costs
- Demolition and Clearing: If there are existing structures, trees, or landscaping in the way, you will need to remove them.
- Grading and Excavation: Existing land needs to be level and graded to support the foundation.
- Utility Upgrades: If your property’s current water, sewer, or electrical systems are not sufficient, upgrades may be necessary.
Architectural Design Costs
Hiring an architect or designer is not always necessary, but if you’re thinking of building a custom ADU, it might be beneficial. Architects will create plans to meet zoning codes and make sure your ADU is functional and aesthetic. You can also purchase prefabricated ADUs – even Amazon sells them!
Ultimately, average architectural costs vary significantly and can range from $3,000 to $15,000, depending on the complexity of the design. Some architects charge a flat fee, and others take a percentage of the total construction cost.
Construction Costs
The bulk of your budget will go toward materials and labor. This includes:
- Foundation Work: Whether it is a slab, crawlspace, or full basement.
- Framing and Roofing: The structural components that form the ADU.
- Plumbing, Electrical, and HVAC Systems: Installing or extending systems to support a livable space.
- Interior Finishes: Flooring, cabinetry, countertops, appliances, and other final touches.
Barring any unexpected expenses, the average construction costs can range from $100,000 to $400,000, depending on size, materials, and labor costs in your area.
Can ADU Increase Property Taxes?
Since an ADU will raise your property’s value, adding an ADU will likely increase property taxes. The exact increase depends on local tax rates and how much the ADU adds to your home’s valuation. Some areas offer tax breaks for ADUs, so it is worth checking with your local tax office.
Alternatives to ADU Construction
If you’re hesitant to undertake an ADU project, there are different ways you can earn additional income through unused land on your property.
One of my favorite ways to quickly add monthly revenue is through peer-to-peer self-storage platforms like Neighbor. With Neighbor, you can list your unused space and be matched with renters looking for places to store their vehicles and other possessions. No construction, no expensive permits, and a lot less upfront costs than building an ADU. Find out how much you can list your space for today.