Renovate
The second housein your backyard
Denver made accessory dwelling units legal across most of the city. Owner-occupancy is gone. HOA bans were overridden.
Most owners still do not know their lot qualifies.
What changed
From a thirdof the cityto most of it
Denver's citywide ADU measure took land that was eligible for an accessory unit from roughly a third of the city to about seventy percent, implementing a state law pushing cities to allow accessory units.
Owner-occupancy requirement removed. The old rule meant you had to live on the property. Move away and the ADU became a problem. That is gone, which is what makes an ADU a durable asset rather than a temporary arrangement.
HOA restrictions overridden. Covenants that banned accessory units no longer control in the way they did.
Rezoning no longer required in most places. The old path meant an individual rezoning application, months of process, and no guarantee. For most lots that step is now off the table.
An ADU is a second income stream on land you already own, without buying another property, another loan on another address, or another set of closing costs. For owners in northwest Denver sitting on appreciated lots, it is the most efficient way to add an asset that exists.
Reality check
Legal is notthe same as buildable
Zoning permission is the first gate. Four more decide whether it actually works on your parcel.
Lot size and coverage
The unit has to fit inside setbacks and maximum lot coverage with the main house already there. Narrow lots and deep houses run out of room fast.
Alley access
An alley makes the whole thing easier. It gives you the entrance, the parking and the utility run. Interior lots without alley frontage are harder and more expensive.
Utilities
Water, sewer and electric to a second structure. Whether you tap separately or extend from the main house changes cost meaningfully.
Trees and existing structures
A protected tree in the wrong spot, or a garage you have to demo, can move the budget by tens of thousands.
Three uses
What peopleactually buildthem for
The zoning conversation is the same. The financial one is completely different depending on why you are doing it.
Income. A long-term rental behind the house. In northwest Denver a well-built one-bedroom unit rents to a real tenant pool, and unlike a short-term rental it is not exposed to licensing rules that change.
Family. A parent who needs to be close but not in the guest room. An adult child who cannot buy yet. This is the fastest-growing reason people call about it and it is not primarily a financial decision.
Flexibility. Live in the ADU, rent the main house. Or the reverse. It turns one property into two decisions, which is worth something the year your life changes.
Denver restricts short-term rentals to a primary residence with a license. Building an ADU on the assumption you will run it nightly is the most common planning mistake I see. Underwrite it at long-term rent. If the rules ever allow more, that is upside, not the plan.
Cost and value
What it costs,what it returns
| Line | What to expect |
|---|---|
| Design and engineering | Architect, structural, survey, soils. The first real spend, and the point at which you find out whether the site works. |
| Permits and fees | Building permit, tap and connection fees, plan review. Denver's timeline is a carrying cost, not only a paperwork cost. |
| Construction | Detached units cost more per square foot than an addition. You are building a complete small house with its own foundation, roof and systems. |
| Financing | Renovation loans, a HELOC against existing equity, or construction financing. Which one you use changes the return more than most people account for. |
| Resale effect | Appraisers treat ADUs inconsistently. A unit with its own address, kitchen and separate utilities appraises better than a converted garage. Build it as a real dwelling or the value does not follow. |
Total all-in cost against realistic monthly rent for that unit in that neighborhood, plus the increase in what the property sells for. I will run both sides against your actual address before you hire anyone. That conversation costs you nothing and it has stopped people from spending on a lot that never would have worked.
Start here
Send the address.I will tell youif it works.
Zoning, lot geometry, alley access, and what the finished unit would rent for. Before you pay anyone for drawings.
Heidi Kuker · milehimodern · Denver, Colorado