Accessory Dwelling Unit (ADU)
An accessory dwelling unit is a smaller, self-contained home on the lot of a primary residence. A basement apartment or backyard cottage qualifies. ADUs, including garage conversions, are a common way to house hack a single-family property.
An ADU has its own entrance, kitchen, and bath, which separates it from a rented spare room. That separation is what makes it attractive for house hacking: the owner keeps a private household while the unit earns rent, without buying a duplex.
Whether you can build or rent one is a local zoning question. Cities differ on lot size, parking, owner-occupancy conditions, and whether short-term rental of an ADU is allowed at all, and rules change frequently. Treat the local planning department, not a general guide, as the authority before counting ADU rent in any projection.
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Related terms: House Hacking , STR Permit
Last updated . Part of the FinExplained finance glossary .