Guest House vs. ADU: Breaking Down the Difference

May 23, 2022

That quaint little cottage in your neighbor’s backyard offers more than just a respite from the hustle and bustle of life in the main house. It can be a sanctuary for temporary guests and for long-term residents alike, offering a place to call home without the price tag of home ownership. You may have seen these mini-escapes described as a “guest house” or an “accessory dwelling unit,” and while they share many traits, there are a few key differences that separate them. Here’s what you need to know before deciding which option is best for you.

Comparing a guest house and an ADU

They may look the same from the outside, but several important distinctions make ADUs and guest houses quite different from one another. 

What is a guest house?

In the context of private homes in the United States, a guest house is a small dwelling on a property intended for guests to stay comfortably overnight in their own private area. They are separate dwellings from the main building on a property.

Guest houses typically consist of a bedroom, a bathroom, and may also have lounging or dining areas, depending on the guest house size and style. Guest houses typically do not have cooking facilities, but some may include a mini fridge and a microwave.

What is an ADU?

Short for Accessory Dwelling Unit, an ADU is a secondary housing unit designed to be separate from the primary residence on a property. There are several styles of ADUs, including detached ADUs (DADUs) that are entirely separate from the main residence, attached ADUs connected to the main residence, and a conversion that changes a garage, basement, or another unused part of a property into its own residence. Sometimes, you’ll see an ADU, and specifically a detached ADU, referred to as a backyard cottage.

What’s the difference between a guest house and an ADU?

An ADU is designed for long-term, everyday living, while a guest house is not.

The purpose of an ADU is to create accessible, affordable housing. They may be smaller than the average home, but they contain all the essentials for living space, including full bathroom facilities and a kitchen area with essential equipment like a fridge, stove, and sink.

From the onset, a guest house is designed for short-term stays. Akin to hotels, guest houses often do not have full kitchens. They’re also limited in use, as guest houses are only permitted for short-term stays, not permanent residency, by most regulatory bodies.

ADUs vs. guest house: Which is better?

Man scratching his head in wonder
Photo by Valentin Salja on Unsplash

How you choose between building a guest house or an ADU comes down to how you want to use it, but there are some clear advantages to an ADU that can pay off in the long run. 

Benefits to building an ADU

  • It can increase your property value. Aside from the fact that there’s a second dwelling on your property, an ADU contributes to the overall square footage of your home. You can expect your property value to increase by tens of thousands of dollars when it comes time to resell.
  • ADUs use your existing space in a smart way. If you’re opting to convert a garage or old pool house into an ADU, you’re putting space that may not be accessed regularly to good use. While the purpose of the space fundamentally changes, you’re making an investment into the overall square footage of your home when you pursue an ADU.
  • You can extract tons of value out of your ADU. Whether you want to ink a long-term lease with a tenant or run an AirBnB for out-of-town visitors, an ADU can be a lucrative and high-demand revenue stream. Especially in real estate markets where demand is through the roof, an ADU can be a quick way to offer modern housing options to a swelling pool of eligible renters.
  • It can help empty nesters stay in place. When it comes time to downsize, empty nesters won’t need to move far from home. With an ADU on the property, they can move into a smaller unit and rent out their larger home, making passive income as they reach retirement age.
  • ADUs expand your space – and your possibilities. Whether you work from home, love to paint, or need a place to work on your sculptures, an ADU can provide the proper space for privacy and creativity.
  • There are many ways to build an ADU. Depending on your budget, space requirements, and how you intend to use an ADU, there are options that fit your needs. For example, a conversion costs much less than building a detached ADU (DADU), but a DADU is more appropriate for long-term investment and income generation. Whichever you choose, there’s an option for you.
  • There are specialized ADU companies that can help keep you on track. The right ADU company can help you stay organized, on budget, and ensure you’re in compliance with the law.. Companies like Spacial use factory build methods so your project stays within your predetermined costs, and they streamline the permitting process so your ADU meets all deadlines within your timeline.

The benefits and drawbacks of a guest house

  • They’re a great way to host your guests in the short term. Leave an impression on your guests by offering them a separate place to rest and unwind. You’ll retain your peace of mind, too, keeping your private space private while being a good host to your guests. However, as beneficial as guest houses may be for a brief stay, they may not be the best solution in the long run, especially if your guest house doesn’t have a kitchen.

  • They can offer a personal escape. Your own personal oasis and a private space for guests – what could be better? A guest house is an excellent way to build your own little slice of paradise just steps from your back door. It’s important to keep in mind, though, that guest houses often do not have full kitchen facilities, so you may find that you make trips back to your main dwelling pretty often.

ADU Laws in select West Coast cities

Reading glasses
Photo by James Sutton on Unsplash

Finally, before a shovel hits the ground, you need to make sure your ADU or guest house is fully compliant with the law. While ADU laws vary greatly from state to state, and even from one city to the next, the laws in these four popular cities can help you better understand what you can expect.

San Francisco 

ADUs are permitted in any area of the city that’s zoned for residential use. If you want to build a detached ADU on your property, you’ll have to submit paperwork to the city’s Rent Board in addition to applying for a permit to add an ADU. If there are tenants on your property, they’ll have 30 days to formally object to the construction of an ADU on the property. 

Notably, California recently implemented several state laws that make ADU building an easier process, overriding local law inhibiting ADU construction in the process. SB 1069 prohibits local governments from requiring ADUs to have their own utility hookups, and several laws regarding the building of ADUs, including the number of ADUs allowed on a single property, which is two. Notably, of the two allowed ADUs, one must be a Junior Accessory Dwelling Unit (JADU), which is less than 500 square feet, attached to the main home, and created by adding no more than 150 square feet to the property. The law also stipulates that local governments cannot supersede state law in matters regarding ADUs.

Los Angeles 

Just like in San Francisco, ADU construction in Los Angeles is governed by state law. However, the city does maintain some additional guidance to help property owners. These guidelines define items like access requirements, size requirements, height restrictions, and setback requirements. A detailed breakdown of ADU requirements in Los Angeles County can be found on the county government’s website. Additional information can be found on the City of Los Angeles’s website, which details permitting requirements and development standards, among other important information.

The city of Los Angeles also manages an ADU accelerator program which pairs older adults with property owners renting ADUs as a way to provide stable, affordable housing to aging individuals. 


The city passed legislation in 2019 that eased the ADU construction process for Seattle property owners, including removing parking requirements, reducing the square footage of the minimum lot size, and defining a floor area limit. The city, which refers to ADUs as “backyard cottages” or “basement units,” manages an online resource containing preapproved DADU designs and a complete list of required permits and applications.


The city of Portland allows ADUs in areas already zoned for residential use. Similar to state law in California, Portland’s code was revised effective in 2021 to allow for more flexibility in planning, building, and obtaining permits for ADUs. Among the changes include the ability to build two ADUs on a single lot. The law’s changes also require wheelchair accessibility for new ADUs. If you’re exploring ADU options in Portland, the city has published a guide to the ADU permit process on its website. 

Opt for an ADU. Partner with Spacial.

Exterior of Spacial ADUs
Photo by Spacial

ADUs allow for far more flexibility and use cases than guest houses. Intended for everyday living, ADUs can accommodate long-term stays, creating opportunities for both short-term and long-term rentals on your property. And through Spacial, you’ll have the right ADU partners on your side to plan and execute your project with ease.

With Spacial, the average time to completion is less than a year, and sometimes as quickly as four months. Our studio and one-bedroom ADUs in the San Francisco Bay Area are designed by a world-renown modular construction expert, so no detail is overlooked as you plan your ADU. And best of all, there’s no ragtag team of professionals to create – your dream team is all at Spacial, with one point of contact who guides you through your choices. We even handle the permitting process for you! So whether you plan to use your ADU as a guest house or rent it long-term, just sit back and relax while we take care of all the heavy lifting.