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Affordable Alternatives to a Shed Home

A shed home is an appealing option due to its simplicity and affordability. However, an ADU may be a better alternative that’s cheaper and easier.
Updated Aug 13, 2020
With rising home and construction costs, it’s not hard to see why so many people are considering shed homes. But are shed homes really the best option for your family?
Here are some things to consider in addition to potential alternatives:

What Is a Shed Home?

A shed home is a type of tiny home that’s made by building or converting a prefabricated shed into a functional living unit. Shed homes range in size from a couple hundred square feet to several hundred square feet. Some shed homes can be built to include kitchens and bathrooms in addition to sleeping and living spaces.

Pros and Cons of a Shed Home

Shed homes come with both pros and cons that you need to consider before you move forward with your plans.


  • Affordability: Shed homes offer an affordable housing solution and can help you avoid rising housing and rent prices. So instead of spending hundreds of thousands of dollars on the house or thousands of dollars on rent every month, you can save money with a shed home.
  • Efficiency: Since shed homes are often prefabricated, they provide a more efficient housing solution in a time when traditional homebuilders are plagued by supply chain issues and delayed construction. So rather than waiting over a year for a home to be built from scratch, you can move into a shed home in a fraction of the time.
  • Simplicity: Minimalism started in the 1960s and has only become more popular since then. Shed homes definitely play into that movement. So if you’re looking for a simple home that has everything you need and nothing you don’t, then you may want to consider a shed home.


  • Customization: Since shed homes are prefabricated, you’re not really able to customize them to meet your needs. For instance, if you need a space that’s ADA-friendly or compliant, you may not be able to achieve that with a basic shed home.
  • Restrictions: The construction of a shed home may be restricted by zoning laws, building codes, and even HOA rules. Before you begin building your shed home, you need to make sure that it’s allowed by a number of different authorities.
  • Complexity: As a result, building a shed home may not be as easy as it seems. You have to deal with everything from regulations to permits and utility connections. What once seemed like an easy DIY project is actually a complex project that requires consultation with professionals.

How To Build or Convert a Shed Home?

If you’ve decided to move forward with the process of building or converting a shed home, here’s what you can expect along the way:
Check zoning laws, building codes, and HOA rules: Before you even begin building a shed home, you need to make sure that it’s legal by checking zoning laws, building codes, and the rules of your HOA if you have one.
  • For starters, your property must be zoned as “residential” to build a shed home.
  • Next, you need to determine if you’re required to meet residential building codes and, if so, what those building codes are.
  • Finally, you need to make sure that your HOA allows the construction or conversion of sheds into livable units.
Apply for permits: Even if you’re technically allowed to build a shed home according to these regulations, the permitting process may pose another challenge. Without the proper plans or expertise, the permitting process is often frustrating, tedious, and time-consuming. You may need to submit several rounds of plans before they’re approved, and you can start building.
Purchase your shed: Now that you have the proper permits, you’re able to finally purchase your shed based on your approved design and specifications.
Begin construction: If you’re working with an existing shed, you can begin the conversion process. If you’re using a new shed, you first need to construct the new structure before you can start converting it into a livable unit.
Finish conversion: Finish the conversion of your shed home by adding things like plumbing, electricity, drywall, paint, lighting, flooring, appliances, and furniture—making sure to work with certified professionals on things like electricity and plumbing so that everything is up to code.

What Are the Alternatives to a Shed Home?

As you can see, the process of building and/or converting a shed home isn’t very straightforward. In fact, it can come with a lot of complexities and added costs.
But are there any alternatives that are still as affordable as a shed home?

Accessory Dwelling Unit (ADU)

Instead of building a shed home, you should consider building a true accessory dwelling unit or ADU instead. An ADU comes with many of the same benefits as a shed home but with fewer disadvantages.
ADUs are totally customizable when you work with companies like Cottage. The ADU building process is also more simplified when you work with builders like Cottage that handle everything from feasibility and permitting to design and construction.

How Much Does an ADU Cost?

While building an ADU from scratch may seem like a more expensive option, it’s likely to end up being less expensive than going with a prefabricated shed that then needs to be converted into a functioning living unit.
Say that you’re looking for a small yet workable 350 square foot space. If you went with a prefabricated shed, you could expect to pay a certain amount for the materials, plus more for things like site preparation, utility connections, foundation, and construction. However, if you went with a custom ADU builder like Cottage, all of these components are included in your initial cost estimate.
The price from Cottage is going to be lower than other end-to-end alternative options since Cottage does everything in-house. With Cottage, there’s no need to contract out to architects or designers. Cottage also has an established network of contractors that have been vetted by industry experts and are fully licensed, bonded, and insured.

Why Choose an ADU Over a Shed?

With this information in mind, why should you consider building a custom ADU over a prefabricated shed home?
  • Competitive pricing: Cost likely played a large role in your decision to build a shed home. However, building an ADU can actually end up saving you money at the end of the day since it eliminates extra costs that can quickly add up and blow your budget.
  • Simplified process: Instead of having to find your own contractors or do all the work yourself, building an ADU offers a more simplified process that’s handled completely by the professionals at Cottage.
  • Quick timeline: What begins as a fast shed construction can easily turn into a long and complicated conversion process involving multiple parties. On the other hand, when you work with an ADU builder like Cottage, everyone works seamlessly together to complete your project in a timely manner.
  • More customization: Building a custom ADU allows you to personalize your unit so that it can meet your unique needs. For example, you can include everything from skylights to in-unit laundry and everything in between. You can even design your unit to match any existing structures on the lot for a cohesive look.
  • Added value: With a fully permitted ADU on your lot, you’re going to add more value to your property than you would with a prefabricated shed home. These units are in high demand, and homebuyers are willing to pay premium prices for properties with functioning ADUs.

Examples of ADU Alternatives

Even with all of this information about ADUs, it can be hard to visualize the possibilities for your property.
Cottage has made it easy for you to see the possibilities for your property with these pre-designed floor plans that the team can modify to fit your exact needs:
  • The Madison comes with one bedroom and one bathroom that spans 364 square feet. Within this floor plan, you can choose between a peninsula or an L-shaped kitchen, an in-unit washer/dryer or a walk-in closet, and a gable or shed roof, starting at just $180,000.
  • The Vanessa comes with one bedroom and one bathroom that spans 436 square feet. Within this floor plan, you can choose between an L-shaped or linear kitchen, a standard or covered patio, and even add more windows, starting at just $220,000.
  • The Nelson comes with one bedroom and one bathroom that spans 450 square feet. Within this floor plan, you can choose between a kitchen with standard or shorter countertops, an open entry with French doors, and a separate washer/dryer space, starting at just $215,000.
  • If you’re looking for something bigger, the Ashbury comes with two bedrooms and one bathroom that spans 750 square feet. Within this floor plan, you can choose between a kitchen peninsula or a U-shaped kitchen, bigger closets or a washer/dryer, and a gable or shed roof, starting at just $295,000.
  • If you’re looking for an entirely customized ADU from scratch, the Cottage design team is also ready to help! Because we build from the ground up, the design can fit with whatever your needs and use cases may be for your ADU.

An ADU: The Ultimate Alternative to the Shed Home

Although a shed home might seem like the most affordable option, ADUs may offer a better solution. To see what’s possible on your property, contact the ADU experts at Cottage for a complimentary consultation.

Get your free consultation and estimate today!