As housing prices rise and urban areas become denser, homeowners are increasingly exploring ways to make the most of their property. Among the popular solutions are backyard cottages and accessory dwelling units (ADUs). But are these the same thing? How do they differ? Understanding the nuances between a backyard cottage and an ADU is crucial if you’re considering adding an extra unit to your property—whether for rental income, guest space, or multigenerational living.
Let’s explore what these terms mean, how they compare, and which option might be right for your situation.
Understanding Accessory Dwelling Units (ADUs)
An Accessory Dwelling Unit (ADU) is a broad term for any secondary residential unit that exists on the same lot as a primary single-family home. ADUs go by many names depending on the region, such as:
- Granny flats
- In-law suites
- Garage apartments
- Laneway houses (in Canada)
- Secondary units
ADUs can be attached or detached from the primary residence. The defining feature is that they are legally habitable and have their own kitchen, bathroom, and sleeping facilities. ADUs often follow local zoning codes and permitting requirements that define their size, placement, and utility access.
There are generally three types of ADUs:
- Detached ADUs: Standalone buildings separate from the main house.
- Attached ADUs: Additions to the primary home, like converted basements or garages.
- Interior ADUs: Often converted from existing interior space, such as attics or basements.
What is a Backyard Cottage?
A backyard cottage is a type of detached ADU that is typically built in the backyard of a single-family home. These are fully independent structures with their own entrance, living area, kitchen, and bathroom. Unlike a converted basement or attached garage, backyard cottages offer a distinct separation between residents, which can be ideal for privacy.
In some cities, backyard cottages are given specific designations. For example:
- In Seattle, they are called Detached Accessory Dwelling Units (DADUs).
- In Portland, they might be referred to as garden cottages.
- In California, they often fall under the umbrella of state-legislated ADUs with relaxed zoning laws.
While the terminology may vary, the concept is the same: a small, standalone home sharing a lot with a larger main house.
Key Differences Between Backyard Cottages and ADUs
While a backyard cottage is technically an ADU, not all ADUs are backyard cottages. Here are some critical distinctions:
- Structure and Location
- Backyard Cottage: Always detached and placed in the backyard or rear portion of the property.
- ADU: Can be either detached, attached, or internal.
This structural distinction impacts privacy, design flexibility, and how the unit interacts with the rest of the property.
- Permitting and Zoning
Local governments often treat backyard cottages differently than other types of ADUs. Because they are detached, they may face different setback requirements, maximum height restrictions, or square footage limits. For example, some municipalities limit backyard cottages to 800 square feet, while allowing larger attached ADUs.
- Construction Cost
- Backyard Cottage: Tends to be more expensive due to the need for separate foundations, utility connections, and full construction.
- ADU (interior or attached): Often cheaper if utilizing existing structures like garages or basements.
However, backyard cottages might offer greater rental value due to increased privacy and appeal.
- Usage Flexibility
Backyard cottages are often better suited for uses like:
- Long-term rentals
- Housing family members (e.g., aging parents, adult children)
- Short-term rentals (where permitted)
- Home offices or studios
Interior or attached ADUs might be ideal for closer intergenerational living or when construction budgets are tighter.
Benefits of Building a Backyard Cottage
For many homeowners, a backyard cottage is an investment in lifestyle, income, and flexibility. Here are some of the most compelling advantages:
- Rental Income
A backyard cottage can be rented out for extra income, helping to offset a mortgage or fund retirement. In high-demand areas, standalone cottages can command premium rents compared to basement apartments.
- Multigenerational Living
With housing costs climbing, it’s increasingly common for families to live together. A backyard cottage offers privacy and independence for relatives while keeping them close.
- Increased Property Value
Studies suggest that properties with permitted, well-constructed ADUs often see a boost in market value. A backyard cottage can be particularly attractive to future buyers seeking rental potential or space for extended family.
- Flexible Functionality
Today’s homeowners value flexibility. A backyard cottage can evolve with your needs—starting as a home office, later serving as a guest suite, and eventually becoming a rental unit.
Challenges to Consider
While the idea of building a backyard cottage is appealing, there are some important considerations to keep in mind:
- Upfront Costs
Building a new detached structure involves site preparation, construction, permitting, and utility hookups. Depending on your location, the total cost can range from $100,000 to $300,000 or more.
- Permitting and Regulations
Each city or county has specific rules about building backyard cottages. These can include:
- Maximum unit size
- Height restrictions
- Parking requirements
- Owner-occupancy rules
- Historic district limitations
Consult your local planning department before proceeding.
- Construction Timeline
Unlike renovating a basement, a backyard cottage takes longer to design, permit, and build. The full process can take 6–18 months from planning to completion.
- Utility Infrastructure
You may need to install new sewer, water, and electrical lines, which can be costly depending on the layout of your property.
Choosing the Right Option for Your Property
When deciding between a backyard cottage and another type of ADU, consider the following questions:
- What is your budget?Detached units cost more but may provide better long-term returns.
- Who will live there?Detached units offer more privacy, ideal for renters or extended family.
- What are your local regulations?Some areas are more supportive of backyard cottages than others.
- How important is privacy?A backyard cottage provides the most separation between households.
- Is rental income a goal?Detached units tend to command higher rents and broader appeal.
The Future of Backyard Cottages and ADUs
As cities search for sustainable solutions to housing shortages, backyard cottages and ADUs are gaining popularity across the U.S. States like California and Oregon have passed legislation to encourage their construction, and urban planners are rethinking single-family zoning to allow more flexibility.
For homeowners, this represents an exciting opportunity—not just for financial gain, but for reimagining how space can serve evolving family and community needs.
Final Thoughts
In summary, a backyard cottage is a specific type of detached ADU, typically located in the rear portion of a residential lot. While all backyard cottages are ADUs, not all ADUs are backyard cottages. Understanding this distinction is key for homeowners evaluating their property development options.
Whether you’re aiming to create space for aging parents, earn passive income, or simply increase your home’s versatility, a backyard cottage might be the perfect solution—offering privacy, functionality, and lasting value.
Before you begin, research your local regulations, consult with an architect or builder, and carefully weigh your long-term goals. With thoughtful planning, your backyard cottage can be one of the smartest investments you make.