ADUs in Phoenix

By Nicholas Tsontakis | DwellBoldly

Phoenix's Accessory Dwelling Unit (ADU) policy is part of the city's broader effort to increase housing density and provide more affordable living options. In response to the growing need for sustainable urban development, Phoenix has streamlined regulations to make it easier for homeowners to add ADUs to their properties. These units, typically smaller secondary homes built on the same lot as a primary residence, are allowed under specific zoning rules that encourage densification while maintaining neighborhood character. By allowing the development of ADUs, the city aims to promote greater housing diversity and alleviate pressure from rising real estate prices.

This policy presents a prime opportunity for real estate investors, particularly those looking to get involved in land development on a smaller scale. With ADUs, investors can maximize the utility of existing lots by adding a rentable unit, effectively increasing property value and potential rental income. The ability to develop multiple units on a single property without requiring the acquisition of additional land makes this approach attractive, especially in a competitive real estate market like Phoenix's. The city's support of these units through policy changes has opened the door for smaller-scale investors to participate in the densification process, while also contributing to the local housing supply.

Moreover, ADUs offer investors an excellent entry point into the world of property management and being landlords. By managing an ADU on their own property or an investment property, investors can gain practical experience in leasing, maintaining, and managing rental units, all within the relatively controlled environment of a single-family home setting. This low-risk scenario allows them to build skills in rental management and tenant relations without needing to operate large-scale apartment buildings or other commercial properties. The policy thus helps investors gradually enter the world of land development and management at a scale that is manageable for newcomers.

Finally, the Phoenix ADU policy represents a win-win situation for both the city and real estate investors. The city benefits from increased density and the availability of more affordable housing options, while investors can leverage this policy to gain valuable experience and potentially expand their portfolios. For those interested in real estate, the ADU framework offers a relatively low-cost, low-risk opportunity to enter the market, develop land, and operate rental properties in one of the nation's fastest-growing cities.

Here is a link to the zoning ordinance that outlines regulations as they relate to ADUs: https://phoenix.municipal.codes/ZO/706

Summary of ADU Section:

• One ADU per single-family lot may be constructed.

• An ADU is not permitted on a lot with a single-family attached dwelling unit, a duplex, triplex, or multi-family dwelling unit unless otherwise permitted by the zoning district. ADUS may be attached or detached.

• A detached ADU may be located within the required rear yard and may not exceed 15 feet in height, unless use permit approval is granted. 

• An ADU shall not have a gross floor area that exceeds 75 percent of the gross floor area of the primary dwelling unit, and:

a. For lots up to 10,000 square feet in net area: 1,000 square feet.

b. For lots over 10,000 square feet in net area: the lesser of 3,000 square feet or ten percent of the net lot area.

If any of those concepts seems confusing, consult your architect, and ask about getting started on your path to investing and developing. Nicholas will be giving a talk at the AZREIA offices on this topic on October 29th, please join and register for the next meeting at Everything You Need to Know About ADUs in Maricopa County.