Are Minneapolis ADUs Really A Road To Riches?

The city of Minneapolis’ recent decision to allow the addition of Accessory Dwelling Units (ADUs) has a lot of people talking to me about finding a duplex that’s perfect for adding one.

After all, wouldn’t an additional unit maximize your cash flow?

Before getting too excited about the ability to add another unit to a property, it’s important to remember the city has rules about doing so.

Perhaps the most important city restriction to know is either the ADU or the main unit has to be owner occupied for the entire calendar year. This restriction is recorded on the deed. In other words, if you sell the property to someone who does not intend to live there, either you or the buyer have to agree to remove all of the improvements you made to have it installed in the first place.

This may result in you having a smaller pool of buyers for your property, as you may find investors unwilling to look at a property that may require that upfront expense and effort.

Only three types of ADUs are allowed: attached, internal and detached. Regardless of where it’s located, the property must be smaller than the principal residential structure. Specifically, the minimum floor area for all ADU’s must be at least 300 square feet. Internal and attached ADU’s may be no more than 800 square feet, while a detached ADU may not be more than 1000 square feet.

In addition to setback and height restrictions, the exterior materials of an attached ADU must match the existing principal structure. You can’t add another door to the front of the property, and any exterior stairway leading to the ADU has to be enclosed. There can be no rooftop decks and balconies can’t face an interior side yard.

If you’re still interested in pursuing adding an ADU to your current duplex or one you intend to buy, it’s important to know you must apply with the city, as well as pay a non-refundable $260 fee. The city will then review your plan for zoning and code compliance.

The passage of the ADU code was intended to be a means to help people age in place, as well as ease our current housing shortage.

While a great idea, it’s equally important to consider what the future consequences to modifying your property may be in the resale market as well. You may find that in the end, it’s not worth the effort or expense.