Maybe you're looking for a home that fits your budget, or perhaps you're already a homeowner who needs extra space, additional income, or a place for a loved one. An accessory dwelling unit (ADU) may be an option worth considering.

ADUs can provide flexible living arrangements for homeowners and buyers, especially for multigenerational families, aging in place, or those looking for potential rental income.

What Is an Accessory Dwelling Unit?

According to AARP, an ADU is a smaller, independent living space located on the same property as a larger primary residence. It typically includes its own kitchen or kitchenette, bathroom, and living or sleeping area.

An ADU can be:

  • Attached to the main home

  • Located within the home, such as a basement

  • Built above or beside a garage

  • A detached structure on the same lot

They may also be called in-law suites, coach houses, carriage houses, or accessory apartments.

What Are the Benefits of an ADU?

1. Keep Family Close While Maintaining Privacy

ADUs can give family members their own independent living space while keeping everyone close by. They can be useful for aging parents, adult children, grandparents, or other relatives.

Freddie Mac recognizes ADUs as a flexible option for multigenerational households and independent living space for family members.

2. Support Aging in Place

For older homeowners, an ADU can be part of an aging-in-place plan. A homeowner could potentially move into a smaller ADU while keeping the main home for family or another use.

An ADU can also provide space for a caregiver or allow an older family member to live close to loved ones while maintaining some independence.

AARP highlights ADUs as one option that can give older adults more choices for aging in place.

3. Potential Rental Income

Depending on local regulations, an ADU may provide an opportunity to generate rental income. That income could potentially help offset mortgage payments or other homeownership expenses.

Freddie Mac notes that rental income from an ADU may be considered as qualifying income in certain circumstances. Learn more about Freddie Mac's ADU guidelines.

4. Make Better Use of Your Property

An ADU can turn previously underused space into functional living space. This could include a basement, garage, space above a garage, or a detached structure.

For homeowners who love their neighborhood but need their home to work differently, an ADU can provide another way to adapt the property rather than immediately moving.

5. More Flexibility as Your Needs Change

Your reason for having an ADU today may not be the same several years from now.

It could initially be used for an adult child, later become a rental, and eventually provide a smaller living space for you or a place for a caregiver.

That flexibility can be especially valuable for homeowners thinking about downsizing, rightsizing, or aging in place.

What About ADUs in Chicago?

If you're considering an ADU in Chicago, it's important to check the rules for the specific property before buying or starting construction.

Chicago's zoning ordinance and Additional Dwelling Unit Ordinance include specific requirements that can affect where and how ADUs can be created. You can review the City of Chicago Additional Dwelling Unit Ordinance and Chicago Zoning Ordinance.

Local requirements can affect eligibility, design, permits, rental use, and other aspects of an ADU, so it's important to confirm what is allowed for a particular property.

Can an ADU Increase Your Home's Value?

An ADU may add value and appeal to a property, but there is no guarantee that the cost of building one will be fully reflected in the home's resale value.

The impact can depend on the location, quality, legal status, design, buyer demand, and comparable properties.

Freddie Mac notes that an ADU can potentially increase home value while also providing additional living space, rental income, or space for family members.

Frequently Asked Questions About ADUs

What is an ADU?

An accessory dwelling unit is an independent living space on the same property as a primary residence, typically with its own kitchen, bathroom, and entrance.

Can an ADU generate rental income?

Potentially, yes. If local regulations allow the ADU to be rented, it may provide an additional source of income.

Can an ADU help with aging in place?

Yes. An ADU can provide a smaller living space for a homeowner or housing for a family member or caregiver nearby.

Can you build an ADU anywhere in Chicago?

Not necessarily. ADU requirements vary by property and location, so zoning and other regulations should be verified before purchasing or building.

The Bottom Line

ADUs can offer homeowners more flexibility, whether the goal is keeping family close, aging in place, creating potential rental income, or making better use of an existing property.

If you're considering buying a Chicago home with an ADU, adding one to your current home, or exploring how an ADU could fit into your downsizing or multigenerational plans, a local real estate professional can help you understand your options and connect you with the right professionals.

Thinking about how your Chicago home could work better for your next chapter? Contact Anne Rossley to discuss your real estate options.