Accessory Dwelling Unit (ADU)

Definition

An Accessory Dwelling Unit (ADU) is a permitted secondary residence on a single-family lot — detached, attached, or interior conversion (e.g., garage or basement). ADUs add a separately-rentable unit without subdividing the lot, and many US jurisdictions (notably California under SB 9 / AB 68 / AB 2221) have streamlined ADU approval to encourage housing supply.

Worked example

A 1,200 sqft SFR on a 6,000 sqft lot in a permissive jurisdiction may support a 1,000 sqft detached ADU at roughly $250–$400 per sqft of construction, with the ADU rentable separately for $2,500–$4,000/month depending on market.

How DealIntel uses it

DealIntel runs ADU as a first-class strategy with its own zoning, setback, FAR (floor-area ratio), and parking checks. Where an ADU is feasible, the platform compares the ADU strategy ROI side-by-side with Fix & Flip and BRRRR on the same property.

Related terms

• Buy, Rehab, Rent, Refinance, Repeat · BRRRRA long-hold real estate strategy that recycles capital through a cash-out refinance after stabilization.
• Capitalization Rate · Cap RateThe annual unlevered return of an income property, expressed as a percentage of its value.
• Comparable Sales · CompsRecent sales of similar properties used to estimate the market value of a subject property.

Matt Abadi is the founder of DealIntel. He leads the development of the platform's six-strategy underwriting engine, 25-point Kill List, and Monte-Carlo financial model — the institutional analysis stack DealIntel applies to every fix and flip deal. DealIntel was founded in 2025 with the central thesis that knowing when not to invest is the most valuable number on the page.