Essential Steps to Building an ADU That Everyone Should Know

Accessory Dwelling Units (ADUs) are transforming Colorado’s housing landscape, offering homeowners a flexible living solution, potential rental income, and an increase in property value. Whether you're looking to build a backyard guest house, an income-generating rental unit, or a home office retreat, understanding the steps involved in ADU construction is key to ensuring a smooth, efficient, and cost-effective project.

This guide will walk you through every stage of the ADU construction process, from design and permitting to final finishes and move-in readiness. We’ll also highlight the differences between prefab and on-site construction to help you determine the best approach for your property.

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What Really is an ADU?

As ADUs gain popularity, you often hear creative interpretations of the acronym, 
“additional dwelling unit,” “auxiliary dwelling unit” or “accessible dwelling unit.”  But essentially they are all referring to the same thing. An Accessory Dwelling Unit (ADU) is a secondary residential structure on the same lot as a primary home. It can be detached, attached, or converted from an existing space like a garage or basement.  To be considered an ADU, there must already be a primary dwelling unit on the property.

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Different Names, Same Idea

ADUs go by many different names depending on where you are, but they all serve the same purpose: adding functional, independent living space to your property. You might hear them referred to as:

🏡 Granny Flats – A term commonly used for ADUs designed to house aging parents while keeping them close.
🏡 In-Law Suites – Perfect for multi-generational living, offering privacy with proximity.
🏡 Guest Houses – Great for hosting family and friends without crowding your main house.
🏡 Backyard Cottages – A cozy, stand-alone unit tucked away on your property.

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No matter what you call it, an ADU provides flexibility and functionality while making smart use of existing space.

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Why Are ADUs Gaining Popularity in Colorado?

Colorado’s real estate market has seen a steady rise in demand, with home prices increasing and available land becoming more limited—especially in cities like Denver, Boulder, and Colorado Springs. ADUs are becoming an attractive solution for homeowners who want to:

✔ Generate extra rental income without buying an additional property
✔ Provide independent living space for aging parents, adult children, or guests
✔ Increase property value by adding a separate, functional living unit
✔ Support sustainability by making better use of existing lots

For homeowners looking to future-proof their property while adding versatile living space, building an ADU is a smart investment in Colorado’s evolving housing landscape.

Is ADU Construction Different From Other Residential Construction?

Yes, ADU construction differs from traditional home building in several key ways:

• Smaller Scale: ADUs typically range from 200 to 1,200 square feet, requiring strategic space planning.
• Unique Zoning Laws: Cities and counties have specific regulations for ADU setbacks, height limits, and parking.
• Shared Utilities: ADUs often connect to the main home's water, sewer, and electrical systems, which requires careful coordination.
• Faster Build Time: Prefab ADUs can be installed significantly faster than on-site builds due to streamlined construction methods.

Understanding these differences can help you plan more efficiently and avoid unnecessary delays.

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Who Can Build an ADU?

Virtually any homeowner can build an ADU on their property, given they comply with local regulations. The key requirement is owning the land where the ADU will be constructed. Prospective ADU builders should first verify zoning laws in their area. Engaging with the local planning department early will help clarify these rules and restrictions.

Additionally, engaging a professional like an architect or designer can greatly aid the process. Not only will they help with accessory dwelling unit design, but they'll also ensure compliance with all regulations. Hiring a reliable general contractor is another step to consider. They handle construction management and deal with various trades involved. While a do-it-yourself approach is feasible for some, the complexities of ADU construction often necessitate professional expertise for a smooth and successful build.

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Assessing ADU Feasibility: Key Factors to Consider

Before jumping into ADU construction, it’s crucial to assess whether your property can accommodate one. Each city and county in Colorado has its own rules and zoning laws that dictate what can and can’t be built. Conducting a feasibility assessment early on can save you time, money, and frustration down the road.

Here are the four key factors to consider when evaluating whether your property is suitable for an ADU:

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1. Site and Shape: Does Your Property Have Enough Space?

One of the first things to evaluate is whether your lot size and shape can accommodate an ADU. While some properties have ample backyard space, others may have irregular layouts, sloped terrain, or existing structures that limit where an ADU can be placed.

• Lot Size: Many cities have minimum lot size requirements for ADUs. For example, in Denver, detached ADUs are allowed on lots at least 3,000 square feet.
• Topography: Sloped lots or rocky terrain may require additional excavation, grading, or foundation reinforcement, increasing construction costs.
• Existing Structures: If you already have a detached garage, shed, or other backyard structures, you’ll need to factor in placement and access for the ADU.

Even if your lot seems small, creative ADU designs—such as attached units, garage conversions, or two-story ADUs—can maximize space while meeting zoning requirements.

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2. Setbacks: How Close Can You Build to Property Lines?

Setback regulations determine how far an ADU installation must be from property lines, fences, and other structures. These rules are designed to maintain privacy, fire safety, and access between properties.

• Rear and Side Setbacks: Many Colorado cities require at least a 5-foot setback from rear and side property lines, though this varies by zoning district.
• Distance from the Main Home: Some cities require a minimum distance between the ADU and the primary residence to allow for fire safety and maintenance access.
• Height Restrictions: In some areas, detached ADUs may have a height limit of 24-30 feet, especially if they include a second story.

For more details, check out our blog on Colorado Setback Guidelines.

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3. Access: Can Your ADU Be Reached Easily?

Every ADU must have safe and legal access for both occupants and emergency services. Whether you’re building a rental unit, guest house, or home office, ensuring convenient access is a key factor in feasibility.

• Separate Entrance: Many cities require ADUs to have a private, exterior entrance that is independent of the main home.
• Pathways and Walkways: Consider how tenants or guests will reach the ADU—will they walk through the backyard, along a side pathway, or through a shared driveway?
• Parking Requirements: While some cities waive parking requirements for ADUs near public transit, others may require one off-street parking space for the unit.
• Fire and Emergency Access: Ensure that fire trucks and first responders can reach the ADU in case of an emergency—this might involve maintaining a fire lane or clear driveway access.

4. HOA Restrictions: Does Your Neighborhood Allow ADUs?

Even if your city allows ADUs, your Homeowners Association (HOA) might not. Some HOAs restrict or prohibit the construction of secondary units, while others may have specific rules regarding size, design, and rental use.

✔ HOA Approval: If your neighborhood has an HOA, check its Covenants, Conditions, and Restrictions (CC&Rs) to see if ADUs are allowed.
✔ Architectural Guidelines: Some HOAs require ADUs to match the architectural style of the main house, including roof pitch, exterior materials, and color schemes.
✔ Rental Restrictions: Certain HOAs prohibit short-term rentals, meaning you may not be able to list your ADU on Airbnb.
✔ Utility and Landscaping Rules: Some HOAs have strict guidelines on utility hookups, fencing, and outdoor space usage for ADUs.

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Types of ADUs

ADUs offer diverse construction types to suit various needs and preferences. Understanding the differences can help you choose the best option. Each type presents unique benefits and considerations that impact design, cost, and overall integration with the existing property.

• Detached ADU: Stand-alone structures for privacy and flexibility.
• Attached ADU: Extensions or garage conversions connected to the main house.
• Interior Conversion ADU: Existing space transformed into livable areas, such as basements.

Prefab vs. Site-Built ADUs

Once you've decided on the type of ADU you want—detached, attached, or a conversion—the next big decision is how you want it built. The two primary construction methods are prefabricated (modular) ADUs and traditional site-built ADUs. Each has its own advantages, challenges, and best-use cases.

Understanding the differences between factory-built modular units, panelized systems, and stick-built ADUs can help you make the right choice based on timeline, budget, and customization preferences.

Prefab ADUs: Faster, More Cost-Effective, and Predictable

Imagine ordering your ADU much like you’d order a Tesla or an IKEA kitchen—it’s designed, engineered, and constructed in a factory-controlled environment, then delivered to your property for final assembly. That’s the prefab approach.

Prefab ADUs are not mobile homes—they are permanent structures that must meet the same building codes as site-built homes. Because they are factory-built, they have tighter quality control, less construction waste, and a much faster build time compared to traditional construction.

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Types of Prefab Construction Techniques:

• Modular ADUs – Entire sections of the home are built off-site, transported, and craned into place on a pre-built foundation.
• Panelized Construction – Walls, floors, and roof panels are manufactured off-site, then assembled like a puzzle on your property.
• Pre-Cut Kits – The ADU is designed and pre-cut off-site, then shipped in pieces to be assembled on-site.

Why Homeowners Choose Prefab ADUs:

• Faster Completion: Since most of the construction is done off-site, an ADU can be move-in ready in weeks instead of months.
• Predictable Costs: No surprise budget overruns—costs are set upfront.
• Less On-Site Disruption: No daily hammering, dust, or long-term contractor presence in your backyard.
• Sustainable Construction: Factory-built ADUs produce less waste and use energy-efficient materials.

Site-Built ADUs: Fully Custom, But Takes Longer

If design flexibility and seamlessly matching your main home are priorities, site-built ADUs are the way to go. Unlike prefab units that are manufactured in a factory, site-built ADUs are constructed from the ground up on your property, just like any traditional home.

Because every part of the process—framing, roofing, electrical, plumbing, and finishing—happens on-site, these projects often take 6 to 12 months to complete. However, the benefit is that you have total control over every detail.

Why Homeowners Choose Site-Built ADUs:

• Fully Customizable: You can design every aspect, from the layout to the finishes, to match the main home.
• No Delivery Restrictions: Site-built ADUs don’t need a crane for installation, making them easier to build on tight lots.
• Seamless Integration: If you want the ADU to look like it’s always been part of your home, site-built is the best option.

Step-by-Step Guide to Building an ADU

Building an Accessory Dwelling Unit (ADU) is an exciting project, but it requires careful planning and execution. Whether you're opting for a site-built ADU or a prefab solution like ELMNTL, understanding each phase ensures a smooth process from start to finish.

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1) Designing and Planning

Designing Your ADU

The first step in building an ADU is designing a space that is both functional and aesthetically pleasing while meeting local zoning requirements. When planning your ADU, consider:

• Square Footage: Different cities have restrictions on maximum ADU size.
• Layout: Ensure the space is efficient and practical.
• Bedrooms & Bathrooms: Determine how many are necessary based on your intended use.
• Natural Light & Ventilation: Large windows and skylights can enhance livability.
• Energy Efficiency: Using sustainable materials and efficient appliances can lower long-term costs.

Many homeowners work with an architect, ADU specialist, or prefab manufacturer to ensure their design is both compliant and optimized for their needs.

Permitting Process

Before construction begins, you’ll need to obtain city or county permits. This process involves:

1. Submitting architectural plans for review.
2. Obtaining permits for zoning, building, plumbing, and electrical work.
3. Paying city fees (cost varies by location).

The permitting timeline can range from a few weeks to several months, depending on your jurisdiction.

Revisions and Adjustments

If the city requires modifications to your design, you'll need to revise and resubmit your plans. Working with an experienced ADU builder or architect can help streamline this step.

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2) Mobilization

Preparing for Construction

Once permits are secured, mobilization begins. This includes:

• Ordering materials (for site-built ADUs) or coordinating factory production (for prefab units).
• Scheduling subcontractors (electricians, plumbers, framers, etc.).
• Setting up temporary utilities for construction.
• Installing fencing or barriers for safety and site protection.

For prefab ADUs, mobilization also includes scheduling factory manufacturing and delivery logistics.‍

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3) Site Work

Clearing the Land

Before foundation work starts, the site must be prepped by:

• Removing existing structures, debris, or trees.
• Checking for underground utilities to prevent disruptions.
• Ensuring proper water drainage to avoid future issues.

Grading and Compacting

A stable foundation starts with a properly graded and compacted site:

• Grading ensures proper water runoff and prevents pooling.
• Compacting strengthens the ground to prevent settling over time.

Utility Connections

At this stage, contractors will begin:

• Extending water, sewer, gas, and electrical lines to the ADU site.
• Installing underground conduit and piping.
• Confirming city permits for utility trenching.

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4) Trenching and Foundation

Excavation and Trenching

Trenching is required to install utility lines and foundation footings. The depth and placement depend on local codes and soil conditions.

Choosing a Foundation Type

ADUs typically have two foundation options:

• Slab-on-grade: Concrete poured directly on the ground, ideal for flat lots.
• Raised foundation: Includes a crawl space, which allows for better insulation and plumbing access.

Concrete Pouring

Once the foundation is framed and reinforced, concrete is poured and allowed to cure for several days before framing begins.

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5) Framing

Framing establishes the structure of the ADU and includes:

• Wall framing (wood or steel).
• Floor and roof trusses.
• Window and door openings.

For prefab ADUs, this step occurs in the factory, so the unit arrives pre-framed and enclosed.

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6) Rough MEP (Mechanical, Electrical, Plumbing)

After framing is completed, rough installations begin:

• Plumbing: Installing water supply, drainage lines, and venting.
• Electrical: Wiring for lighting, outlets, and appliances.
• HVAC: Ductwork installation or mini-split systems for heating and cooling.

Before moving forward, an inspection is required to ensure everything meets code.

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7) Exterior Finishes

At this stage, the ADU starts to resemble a home. Key exterior tasks include:

• Roofing installation (shingles, metal, or flat roofs).
• Siding installation (wood, fiber cement, stucco, etc.).
• Windows and doors installation.
• Weatherproofing and insulation to improve energy efficiency.

For prefab ADUs, most exterior finishes are completed in the factory, requiring only minor adjustments on-site.

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8) Drywall and Insulation

Installing Insulation

Proper insulation enhances energy efficiency and comfort. Common options include:

• Spray foam (provides excellent air sealing).
• Fiberglass batts (cost-effective and easy to install).
• Hemp insulation (eco-friendly and sustainable).

Hanging Drywall

• Drywall sheets are installed over framed walls and ceilings.
• Seams are taped, and joint compound is applied.
• Once dry, walls are sanded, primed, and ready for paint.

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9) Interior Finishes

This phase transforms the ADU into a livable space by adding the final aesthetic touches:

• Flooring installation (hardwood, tile, vinyl, etc.).
• Painting and trim work.
• Cabinetry, countertops, and shelving.
• Appliance installation.
• Final plumbing and electrical hookups.

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10) Final Touch-Ups and Inspection

Before move-in, a final inspection is required to verify compliance with building codes. Inspectors will check:

• Smoke and carbon monoxide detectors.
• Plumbing fixtures and electrical systems.
• Doors and windows functionality.

Once the ADU passes inspection, it is officially ready for occupancy!

For prefab ADUs, a final check includes:

• Confirming module connections.
• Testing all plumbing and electrical hookups.

ELMNTL Prefab ADUs Can Be Completed Much Quicker Than Traditional Site Built ADUs

Differences Between Prefab and Stick Build ADUS

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Making Your ADU Investment Count

Building an ADU is more than just a home improvement project—it’s a long-term investment that enhances your property’s value, functionality, and potential for additional income. Whether you’re adding space for family, creating a rental unit, or designing a backyard retreat, choosing the right construction approach is key to ensuring efficiency, cost-effectiveness, and long-term satisfaction.

For homeowners looking to streamline the process, reduce on-site disruption, and fast-track completion, prefabricated ADUs offer a compelling advantage. With pre-engineered designs, factory precision, and faster installation timelines, they eliminate much of the uncertainty that comes with traditional site-built construction. 

Ultimately, the best ADU is one that meets your lifestyle, budget, and property needs while adhering to local regulations. Working with trusted professionals—from feasibility and design to final installation—can help you avoid costly mistakes and ensure your ADU is built to last.

With Colorado’s growing demand for flexible housing solutions, now is the perfect time to explore your ADU options. 

Looking to invest in an ADU? Let ELMNTL handle the entire process—from feasibility assessments to final installation—maximize your property’s potential today! 🚀

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FAQs on Building an ADU

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