What Does the New Massachusetts Law Say?

Thanks to the Affordable Homes Act, Massachusetts now allows ADUs by right across the entire state in all residential zoning districts — with a few key guidelines:

• One ADU is allowed per lot, including on properties with up to four residential units.

• Owner-occupancy is not required, making ADUs accessible to both homeowners and investors.

• Parking requirements are waived for properties within a half-mile of public transit, including bus stops.

• If a project meets all of the state’s criteria, it qualifies as a “Protected Use ADU”, limiting local government interference.

• Municipalities can still impose “reasonable” regulations, though it’s unclear how strict or enforceable these will be.

One major caveat: Boston is exempt from the state law due to its own zoning authority. Despite promoting ADUs with guidebooks and incentive programs, Boston still requires owner occupancy, special permitting, and maintains restrictions that deter investor participation — arguably where ADUs are needed most.

Common Types of ADUs

Whether you're a homeowner looking to earn rental income or an investor exploring new strategies, there are several common ADU configurations:

• Basement Apartments – Often the most cost-effective option, especially if partially or fully finished.

• Garage Conversions – Attached or detached garages converted into small studios or 1-bedroom units.

• Internal Carve-Outs – Reconfiguring part of the main house to create a self-contained suite.

• Detached New Construction – A small standalone home built in the backyard (typically 900 sq. ft. or less).

• Modular or Prefab Units – Delivered partially built and assembled on-site, often faster and more affordable.

Why Do ADUs Matter?

ADUs represent one of the most promising ways to increase housing supply in Massachusetts without overhauling entire neighborhoods. They provide meaningful benefits for:

Homeowners:

• Generate passive rental income ($1,800–$2,200/month for internal units, up to $3,000 for detached units)

• Age in place with a smaller living space while renting the main home

• Help offset mortgage costs or support multigenerational living

Investors:

• Strong ROI potential: 10–15%+ returns are common for smart conversions

• Add value to multifamily properties and unlock untapped income

• Take advantage of by-right zoning to create new units without major entitlement hurdles

The Broader Community:

• Helps solve the housing shortage with minimal disruption

• Encourages small-scale development rather than massive luxury complexes

• Supports renters looking for affordable, well-located housing

• Creates work for local contractors, designers, and suppliers

• Boosts municipal tax revenue and economic activity

What’s the Catch?

While the benefits are clear, there are still some common challenges:

• Being a landlord isn’t for everyone — some homeowners may be hesitant to rent space on their property.

• Financing can be tricky, especially early on when comps are limited and appraisal data is scarce. A 2021 study in Oregon found that on average, ADUs added 70% of their build cost in appraised value.

• Municipal resistance is real. Some cities like Fall River, Revere, and Woburn are pushing back or delaying implementation.

• In Boston, the owner-occupancy requirement and other barriers mean ADUs are still out of reach for most investors — even though they’d be among the biggest adopters if permitted.

What Do They Cost to Build?

Basement / Internal Conversions: $10K - 100K (if mostly up to code)

Garage Conversions: $150K–$250K

Detached New Construction: $250K–$350K

Modular / Prefab Units: $200K–$300K

Cost depends heavily on existing infrastructure (utilities, structure condition, code compliance) and location-specific labor and materials. We recommend our consulting package for homeowners looking for more clarity on specific pricing.

Why This Matters Now

In cities like Los Angeles and San Diego, ADUs have exploded since regulations were loosened. California has permitted over 100,000 ADUs since 2016, showing the model works when policy supports it. Massachusetts is just beginning that journey.

As land prices and development hurdles increase, ADUs offer one of the last remaining paths for small-scale investors and homeowners to add value and build wealth — while helping fix the housing crisis.