Everything You Need to Know About Building a Backyard House

Are you outgrowing your current home or suddenly caring for an aging parent?

There are several reasons to buy more space, whether you’re starting an online business or welcoming a graduate home from college. Multigenerational homes also grow increasingly cramped. However, moving into a bigger house isn’t the only option.

More homeowners like yourself are building extra homes in their backyards to solve common challenges. Plus, you’re not as restricted by building regulations as you may think. Recent California laws have made it even easier to install a backyard house on your property.

Yet, how do you get a backyard home? What are the latest guidelines and design tips? How do you find the right builder?

Start from scratch with this complete guide to building a guesthouse in your own backyard.

What Is the Technical Term for a Backyard House?

Backyard homes are technically called accessory dwelling units or ADUs for short.

By definition, an ADU is a separate secondary residential unit on the same property as the primary home. While many ADUs stand alone, you can attach ADU additions to the main house, garage, and basement too. 

ADUs are also called:

• Cottages
• Carriage houses
• In-law apartments
• Self-contained units
• Garden suites
• Mother-in-law suites

You may be more familiar with its traditional name, the granny flat. 

A Brief History of the Granny Flat

This idea was popularized in the Victorian era. Known as dowager homes, these ADU precursors housed windows of former property owners. Typically, another family member would inherit the property, allowing the widow to stay.

Early accessory dwelling units were standalone homes surrounded by open fields. As early suburbs popped up, dowager homes morphed into the modern-day ADU or “granny flat.” However, these units housed aging loved ones irrespective of previous property ownership.

Accessory Dwelling Units vs. Tiny Homes

However, ADUs are not classified as tiny homes. Though smaller than single-family homes, accessory dwelling units have separate building regulations and design philosophies than tiny homes.

For example, many tiny homes have wheels while accessory dwelling units are fixed or attached. Furthermore, tiny homes have strict sizing requirements, regulating them to a smaller size than ADUs at a maximum of 400 square feet.

ADU Size Limits

A backyard home in California can stand no fewer than 150 sq feet and no larger than 1200 square feet. Thus, ADUs can accommodate more residents and lifestyles than tiny homes. 

Maximize space in your secondary unit with the following ideas:

• Add floating shelves 
• Use vertical storage methods
• Install hooks for hanging outdoor gear
• Install a rolling ladder

You could also install a foldable Murphy bed with storage underneath. Mountable electronics, shelving, and corner tables also save space in cozy backyard cottages. 

How to Choose the Right Secondary Unit for Your Needs

Acton ADU will personalize your backyard home,  working with you to make selections for  the ideal cottage. 

First, define the purpose of your ADU. Next, think about various design elements to accommodate that purpose. 

For example, if you’re building a unit for a grandparent, you would consider the following factors:

• Bathroom accessibility and safety
• Shower seats and grab bars
• Slip and fall protection
• Hand railings for support
• Reachable cabinets
• Wheelchair ramps
• Wide doorways
• Door levers

Your loved one’s independence is another variable. That’s another reason why ADU homes are so unique. Cozy backyard homes let seniors maintain their independence without sacrificing their safety. AARP also notes that ADUs allow seniors to maintain community ties, reducing the risk of elderly depression. 

Backyard Cottages

In the above case, a standalone backyard cottage is the best choice. Your loved one can enjoy their independence while still being steps away from assistance. Plus, caretakers can respond quicker to accidents and emergencies.

More parents are investing in backyard houses for their adult offspring and their children. For example, a young couple or individual can live in an ADU while they’re saving money for their first home. This option is great for college graduates paying off mountains of school debt.

Thus, secondary units are quickly becoming an important generational investment.

Are you planning on selling your home down the line?

Even better, a backyard house can boost your home value substantially! This bodes well for your ADU ROI. 

Home Office Cottages

Do you work from home or aspire to start a home-based business?

Studies reveal that having a designated third space improves productivity, a common challenge for remote professionals.

Remote workers and home-based entrepreneurs typically retreat to home offices, living rooms, or kitchens to work. However, a designated third work space away from the main home mitigates distractions and boosts concentration. 

Plus, an independent backyard office keeps your work separate from your growing family. Thus, when you’re at home, you’re more present in the moment.

You can also customize your office cottage to leverage more sunlight and fresh air, stimulating creativity. This is a great idea for a backyard art studio.

Backyard House Rentals

Do you want to start generating rental income from your property?

Instead of renting out rooms or the entire primary residence, you can install a backyard ADU to rent. A separate ADU is a big draw for tenants since they enjoy a private bathroom, kitchen, and common area. Thus, you can command a higher monthly rental price.

Be aware, you must follow California’s landlord and tenant regulations to avoid fines. Homeowners may be subject to additional guidelines, as well. You should also be aware of state laws regulating Airbnb listings for ADUs.  

Basement Accessory Dwelling Units

Basement units are also a popular choice, especially with teens eager for independence.

However, renovating your basement isn’t enough. Basements need extra insulation and upgrades to become truly livable spaces. For example, basement units have real plumbing and HVAC systems, plus kitchens, water filtration, large appliances, and ventilation.

Basement accessory dwelling units are also called junior ADUs. A junior ADU is a living unit built into an existing area of the home, like basements, attics, and garages. However, these spaces are typically limited to 500 square feet or less

Though small in size, junior ADU homes are perfect for college students who want independent living without the high cost of a college dorm. Parents save between $12,000 and $17,000 on college living expenses alone, which also cuts down on student loans.

A Junior ADU is also plenty of space for live-in nannies and caretakers.

However, note that Junior ADUs are not always easy to permit because working with any existing structure increased the complexity and requirements needed to complete a safe, legal build.

Converted Garage ADU

Likewise, a renovated garage with new flooring and paint isn’t an adequate living space. Garage ADUs make excellent home-based offices. Some of the world’s most innovative companies started in garages, including Apple, Google, and Amazon.

Garage ADUs are also good for high-school seniors, college students, and grads moving home. Plus, it’s private enough to attract serious tenants if you want extra income.

However, note that garage ADUs, like Junior ADUs, can add lots of unforseen complexity and cost in order to meet your city’s requirements for habitable space.

Finding Your City’s ADU Regulations

ADU regulations in California vary by city. Before you can build a backyard house, you have to find out if you qualify for a secondary unit.

First, locate your city on the ADU rules page to view regulations governing your area.

For example, if you click on Palo Alto, you’ll learn that you may build a permitted ADU on any single-family property you own. Furthermore, you can build up to two stories!

However, detached homes are often limited to only one story, including attached garage ADUs. It might sound contradictory, but ultimately it depends on your city and your lot.

You’ll notice slight size limitations between one bedroom and two-bedroom ADUs too. For example, in some places a one-bedroom attached ADU can’t exceed 850 square feet, while a two-bedroom unit must remain 1,000 sq ft or under. Knowing what’s legal on your property is a good first step.

Detached units can be different as well. For example a detached unit may not be able to exceed 900 square feet for one-bedroom living spaces, but a two-bedroom may still be  limited to 1,000 square feet max.Again, the importance of knowing what you can do on your property is critical to your project’s success.

Statewide ADU Regulations Simplified

For starters, homeowners don’t have to live in the main residence to build a secondary unit on the property. This change is a major reason behind the ADU boom happening in the state. Therefore, if you want to become a landlord or home investor, start building ADUs now to boost those resale values.

Despite the good news, ADU owners should keep up with legislation reviews. The current legislation is up for review in 2025. Hence, any ADU built before 2025 is exempt from any potential changes that may revoke the recent law change.

The new ADU regulations are especially good news for homeowners who live in HOA neighborhoods. Previously, homeowner’s associations prohibited backyard homes. Yet, the new law overrides HOA authority, opening the door for homeowners to move in their parents or rent out their ADUs.

Furthermore, owners of historic homes may now install backyard homes.

State ADU laws also override certain lot size restrictions imposed by local municipalities. Plus, you’re not limited to building both a junior and a detached ADU on your property, irrespective of the lot size.  

Fewer Fees and Lower Energy Costs

Property owners with backyard homes enjoy less impact fees since passage of the new law. An impact fee is a one-time payment billed by the city to offset infrastructure costs. However, this fee could be as high as $20,000 or more. Thus, happy ADU owners are enjoying the burdens lifted since the inaction of the new regulations.

It gets better!

Before the new regulations took effect, ADU energy supply was considered distinct from the primary home. Consequently, homeowners were burdened by higher energy costs and connection fees. Now, ADUs aren’t considered new residences in regards to energy and utilities.

Shorter Permit Time Window

Before 2020, you had to wait easily more than three months or more for an ADU permit. Now, the state is making an effort to push cities to permit ADUs approved in just 60 days. However, in practice this may not always be the case.  

ADU Parking Regulations Lifted

The required parking space stipulation is also gone. This change is welcome news for homeowners who were forced to build an extra parking space.

If your backyard home is located 880 yards from public transit, you’re not subject to any additional parking regulations either. Previous parking stipulations were also lifted from backyard homes in historic neighborhoods.

These new accessory dwelling unit regulations work in owners’ favor, including homeowners who function as caretakers and property owners who want passive rental income.  

Prepping Your Property for a New Backyard Home

If you’re the primary homeowner, have the required lot space, and ADU measurements, there shouldn’t be any hiccups in the approval process. In fact, state regulations prohibit municipalities from blocking qualifying ADU permits.

The next step is to prep your property for construction. Acton ADU can simplify this process for you and prep your site for a personalized build. Yet, it helps to understand the process so you know which questions to ask. 

Site Clearing and Prep

You’ve picked the perfect spot for your secondary living unit. There’s just one problem. The area is riddled with tree trunks, roots, rocks, and weeds.

You’ll need to either clear this area before a contractor can start, or be aware of this added expense associated with the site prep.

However, it’s easier, to begin with an evaluation. A contractor will go over all ADU logistics, including yard coverage, possible challenges, materials, and budget constraints.

ADU contractors also discuss site clearing processes to prepare your lot for construction. Depending on the level of clearing, you may need an additional permit. However, your contractor will update you on any additional steps.  

Assess the Surrounding Environment

Visualize the size of your new granny flat before building. You also have to consider the space around the perimeter of the unit. If you’re building an in-law suite for your mother, she may want to enjoy some peace and quiet away from noisy households.

Other important considerations include:

• Natural sunlight
• Shade cover
• Scenic views
• Exhaust fumes from traffic
• Noise pollution
• Pedestrian foot traffic
• Nearby creeks and canyons

Whether you’re building in the suburbs or a rural area, you must prioritize safety. Steep inclines, waterways, and canyons can be dangerous for senior citizens and some individuals with disabilities. Children residing in garden suites should also live a safe distance away from unsafe terrain.

Leverage Natural Sunlight

Natural sunlight delivers natural doses of vitamin D, uplifting mood and restoring energy. Make sure to leverage sunlight in your backyard home design. 

If there’s too much shade cover, you can always remove or trim back trees. Study where the sun hits the location to hone in on a sunny spot too. Your contractor can also suggest the ideal location based on city and neighborhood requirements, as well as lifestyle. 

ADU Utilities

You’ve found the perfect spot. Now it’s time to get your ADU utilities in order.

Like your primary residence, your backyard house also needs utility hookups, piping, electrical wiring, and running water. You need plenty of room underground for a complete plumbing system. Even if your lot looks fine on the outside, you may have hidden roots and rocks obstructing pathways. 

Fortunately, an expert can help connect your ADU utilities to the main energy system. You don’t need any separate service meters either.

Talk to your contractor about combining the kitchen and bathroom plumbing into a shared wall. This trick simplifies your plumbing, reducing the risk of repairs and water pressure issues.

There are plenty more money-saving tips for conserving energy in your backyard home too.

Energy-Saving Tips for Backyard Homeowners

You already learned about maximizing space. Plus, cleaning your ADU regularly maintains good indoor air quality, which reduces HVAC repairs, medical costs, and plumbing costs.

More granny flat owners are switching to 100% electric power. In fact, some California jurisdictions mandate electric ADU builds.Such cities include:

• Campbell
• San Jose
• Cupertino
• Windsor

The list of gas-free cities in California is growing, so be to sure to stay updated on any changes in your area.

As an alternative, you’ll also be required to install solar panels on your ADU or main home to offset energy usage.

While accessory dwelling units aren’t required to have solar panels like new single-family homes in the state, they may be mandated in the near future. Fortunately, most homeowners report significant cost savings with solar power. 

Like any other house, ensure your granny flat is well insulated to conserve heat and cool air. Furthermore, by involving your ADU contractor from the beginning, you’ll avoid the pitfalls of costly design decisions that drive energy costs.

Building Your New Granny Flat

After installing underground utilities, your contractor will prepare the foundation, structural rebar, and framing, followed by plumbing, electric, and mechanical work.

More steps include:

• ADU roofing and siding
• Insulation
• Drywall
• Interior and exterior painting
• Flooring installation
• Cabinetry and shelving
• Bathroom appliance installation

Acton ADU also has interior packages, creating even more personalization options for owners.

Construction time can take anywhere from two to four to six months, depending on the ADU type, design, and upgrades requested. Site clearing can also take a day to a week, depending on the amount of debris and tree removal.

Working With an ADU Builder

Only an experienced ADU contractor can build a safe, stylish backyard house that’s up to code and will retain its value and grow the value of your property. A personalizedin-law suite also provides that extra peace of mind factory-made ADUs can’t offer. You can also enhance your home with additional safety upgrades, like railings, ramps, and wider doors for wheelchairs.

Experienced builders also streamline the building process with the city. For example, Acton ADU offers pre-approved plans that have already been reviewed prior by the city of San Jose, as well as a large library of build ready plans that are ready for building. This perk drastically reduces the permit wait time, speeding up the project timetable, all while saving money and not sacrificing quality.

Even better, you don’t have to worry about costly design issues. Every pre-approved plan is designed for optimal energy efficiency and quality, which lowers cost and drives asset value. 

Transparent Pricing

Transparent job quotes are so important. Reputable ADU builders are honest about project logistics, quote accurate estimates based on market rates, the highest quality materials, experience, labor, and more variables.

Companies that don’t evaluate logistics or quote transparent estimates are waving a red flag. Plus, hourly rates can quickly spiral into insurmountable costs. Whereas, quotes are more straightforward, making budgeting much easier.

Estimating costs in advance helps you budget for your future build.

Even better, you don’t have to put off construction for lack of funds. Work with ADU building companies that can help.

Funding e can be a real for families who need ADUs for extended families. Fortunately, Qualified ADU owners can apply for financing to speed up construction.

Financing plans vary among lenders. For example, Acton ADU offers the following financing perks to eligible borrowers:

• Low fixed rates
• Financing for up to two years
• Interest-only payment options
• Generous adjustable rates
• Property valuation
• Closing costs covered in loan total
• Super-low 10% down payments

Don’t hesitate to reach out directly about financing to discuss a plan that works for you. You can even apply for financing to upgrade your primary residence, increasing your total property value!

Enjoy the Benefits of a New Backyard Home

Think about the benefits an ADU can have on your life, family, and future goals.

Build a backyard house for your favorite grandma, inspire guests with a light and airy ADU, or save for your future with passive rental income.

Remember to involve a trusted contractor from the very start. Acton ADU wants to be there every step of the way.

Learn more about our unique approach to ADU construction or contact us now to get started on your evaluation.