Strategy 2

Basement apartment & ADU house hacks in Colorado

Live upstairs and rent a basement apartment, or rent an ADU in the back yard. You keep your privacy and the rent can be strong.

Short answer: A finished basement with its own entrance, kitchen and egress windows, or a separate ADU, lets you rent a full unit while you live in the main home. Since June 30, 2025 the larger Front Range cities must allow one ADU on single-family lots through staff approval, and HOA bans on ADUs are void there. Permits, codes and short-term rental rules still apply.

What the 2024 ADU law changed (HB24-1152)

  • Covered cities must allow one ADU on lots where single-family homes are allowed: inside the home, attached or detached.
  • Approval is administrative, based on objective standards, with no public hearing.
  • Cities generally cannot require you to live on the lot or add a new parking space, with some exceptions.
  • Covered cities must allow ADUs of at least 500-750 square feet.
  • HOA rules that ban ADUs are void in covered cities, but reasonable HOA rules can still apply.

Before you buy a home with a basement unit

  • Was it finished with permits? Ask for them or check with the city.
  • Do sleeping rooms have egress windows?
  • Is there a separate entrance, and is there a kitchen, or room to add one legally?
  • Ceiling height, smoke and CO alarms, and fire separation
  • Separate utilities or a fair way to split them

The numbers

A full basement unit or ADU usually rents for more than a single room. Building a new ADU costs real money, so most first-time buyers start with a home that already has a legal basement unit. Run both options in the calculator.

Simon lives this one: his Littleton home has an ADU.

Questions people ask

Is my city covered by the Colorado ADU law?

HB24-1152 covers cities of 1,000+ people inside a metropolitan planning organization and some large unincorporated areas, including Denver, Aurora, Colorado Springs and Boulder. The state DOLA website lists covered places.

Can my HOA stop me from adding an ADU?

In cities covered by HB24-1152, HOA rules that prohibit ADUs are void, but HOAs can still apply reasonable rules. Read the HOA documents before you buy.

Is an unpermitted basement apartment a problem?

It can be: insurance, safety and city enforcement can all become issues. Ask for permits and plan for the cost of making it legal.

See your real numbers in 2 minutes

Plug in a price and rents and see what you would really pay to live there. Then book a free 30-minute strategy call with Simon or Ewelina.

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