Additional Dwelling Units (ADUs) are extra homes in your backyard.

Cities all over North America are opening their minds to them.

They add density to existing neighborhoods and diversify the local cost of housing.

Adding backyard homes to a neighborhood is a great way for people to live near friends with different incomes.

They’re also a great investment, theoretically.

Say it costs you $125,000 to build an ADU.

Say you’re able to rent it out at $1,500/mo.

That’s $18,000 a year. Let’s say $15,000 a year when you consider utility costs and vacancy.

$125,000/15,000 = 8.3 year return on investment.

$15,000/125,000 = 12% annual return.

That’s pretty good. So why don’t you see them all over?

In most cities, they’ve only recently allowed them.

Toronto, which began allowing them in 2021, had only 97 permits issued as of November 2023.

Meanwhile Vancouver began allowing them in 2009, and had 531 units permitted in 2015 alone.

This highlights the need for the local market to mature before construction really starts to boom.

Each municipality will have slightly different rules, so porting over ADUs from a nearby city isn’t a simple copy-paste.

It takes a few years before local companies have responded to changes in code with a compliant design.

Given much of North America began allowing these around 2020, expect to start seeing them around town.

Interested in building one yourself? Reply to this email, I may be able to help.

The Treetops

Architecture worth sharing

I’m building a construction company with two incredible people.

Next year we’ll begin building ADUs.

We just published this video sharing everything we’ve learned from our 2 year journey.

Check it out!

Forward this to a friend, family member, or funky neighbour.

Reply with the cool projects you’re working on and I just might feature them in The Treetops.

Catch you next Thursday 🫡

Charlie Frise
Backyard Architect

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