Colorado is in the midst of a housing evolution, and we’re right at the front of it. At Colorado Home Sales, we’ve long been focused on modular and manufactured homes across Colorado Springs, Woodland Park, Florissant, Aurora, and beyond. But what if we told you there’s a way to leverage these homes—or add an ADU (Accessory Dwelling Unit)—for extra income, multigenerational living, or just smarter use of property? In this blog, we’ll dig into how modular homes + ADUs can become compelling income engines in Colorado, why it’s cost-effective and sustainable, and what to watch out for along the way.
Why Modular Homes & ADUs Are a Match Made in Real Estate Heaven
Modular (or prefab) homes are built in a factory in modules, transported to the site, and assembled on a permanent foundation. In many ways, they offer the same quality standards as traditional stick-built homes but with less waste, more quality control, faster construction, and often lower cost per square foot. (We ourselves list a variety of modular homes in Colorado Springs on our site, tailored to local climate and code.)
An ADU—think backyard cottage, in-law suite, studio dwelling—can be attached, integrated, or detached from the main house. In cities like Colorado Springs, new ADU ordinances now allow such units in properties with single-family detached dwellings (with some standards).
Combining the two is powerful: you could build (or purchase) a modular “mini-home” as an ADU on your lot, or design your modular home with a built-in accessory unit. The modular method’s cost efficiencies can make building an ADU far more feasible than conventional on-site construction in many cases.
Legislative Winds Are Shifting in Colorado: ADU Opening Doors
In 2024, Colorado passed House Bill 24-1152, which mandates that many municipalities (those with over 1,000 people in designated metro planning areas) must allow one ADU per single-family detached lot starting June 30, 2025.
The law also curtails heavy-handed local restrictions: you can’t be forced into burdensome design standards beyond what your primary home demands, and municipalities can’t require extra parking for certain ADUs.
That said, local rules still matter—especially in places not subject to this law or in cities with additional overlays (historic districts, wildland zones).
In Colorado Springs, for instance, the city adopted a new ADU ordinance in April 2025, permitting ADUs in all zones with single-family homes, subject to size, setback, height, and compatibility constraints.
So the momentum is there—and that regulatory tailwind makes the idea of building a modular ADU more viable than ever.
Income + Flex Use = Win/Win
Rental Income
One of the clearest advantages is extra cash flow. Let’s run some rough numbers: assuming you build or place a modular ADU of 500–800 sq ft, the total cost (including site prep, hookups, finishes) might range $200–300/ft² depending on location.
Then, in many Colorado markets, a one-bed ADU might rent for between $1,100 and $1,700 per month.
That can translate to strong returns over time after amortizing your build cost, especially if your modular supplier gives good pricing and you keep maintenance efficient.
Extended Family / Multigenerational Use
You don’t always have to rent it out. Maybe your aging parent wants autonomy, but with family close by. Or your adult child needs a semi-independent nest while you retain oversight. An ADU built via modular tech gives you the flexibility to alternate between family use and rental when needed.
Lease Options or Live Near Your Tenant
Another creative strategy: you build a modular ADU, live in the smaller main house, and lease the main house itself out, or vice versa (depending on local regulations). Some counties require homeowner occupancy in one of the units. For instance, in Jefferson County, the homeowner must live in either the primary home or the ADU—not both- as rentals.
So you’ll want to dig into local zoning to pick the model that works best.
Cost Efficiency + Sustainability = Smart Investing
Faster Build, Less Waste
Because modular homes (and modular ADUs) are built in factories, you reduce on-site labor risks, weather delays, and material waste. That means lower soft costs (less wasted material, fewer overruns) and more predictable budgeting.
Energy Efficiency & Green Options
Many modular builders are pushing high-performance envelopes, energy-efficient systems, and sustainable materials.
These efficiencies lower utility bills for you or your tenant—another bonus in your investment return.
Adaptability Over Time
One of the beauties of modular is adaptability. If you start with a simple ADU now, you might expand later (if your lot allows), or you might relocate modules, repurpose interior layouts, or upgrade finishes. You’re not locked into one rigid build forever.
What to Watch Out For (Because We’re Realists, Too)
Zoning & Local Rules
Even with state law changes, many cities and counties still impose setback, floor area, height, design compatibility, and plumbing/sewer restrictions. For example, in Colorado Springs, an ADU may be limited to 50% of the main structure or 1,250 sq ft (whichever is less).
Some local jurisdictions still limit ADUs under 500 sq ft or over 800 sq ft, or impose impact fees. In one Colorado town, water hookup fees reached ~$65,000.
Financing
Financing modular or manufactured homes can sometimes be more complex than a standard mortgage. Some loans require FHA, VA, or construction-to-permanent programs. We at Colorado Home Sales are geared to help you navigate that maze.
Utility Hookups & Site Prep
The modular part is efficient—but connecting to sewer, water, electric, and ensuring foundations, drainage, access, and grading are handled correctly can still be costly and time-consuming. Factor those into your margin.
Tenant Management & Liability
If you rent out, you’ll want to manage tenant screening, leases, insurance, maintenance, and compliance (e.g., minimum rental periods). Some jurisdictions prohibit short-term (less than 30-day) rentals for ADUs. In Jefferson County, for example, ADUs must be rented for at least 30 consecutive days.
Putting It All Together: A Real-Life Example
Imagine you own a 7,500 sq ft lot in Colorado Springs with a modest home. Under the new ADU ordinance, you can build a detached modular ADU of up to, say, 750 sq ft (assuming your main dwelling is under certain thresholds) with a 5 ft rear setback.
You partner with us (Colorado Home Sales) to supply a modular shell with finishes. Your modular cost (shell, finish, delivery) comes in at $180/ft². You invest $135,000 total. You rent it for $1,400/month.
Your gross annual rent is $16,800. After operating expenses, vacancy buffer, and mortgage, you might net 4–6 %. That means over time, your ADU essentially pays itself, while giving you optionality (family use, resale value, etc.).
If trends hold, modular + ADU becomes a compelling path to passive income, especially in rising-value Colorado markets.
At Colorado Home Sales, we’re watching these trends closely. We already carry manufactured homes and modular homes in Colorado Springs and see a natural extension into ADU-style modular units or dual-unit models. You could live in one, rent the other, or start a small modular-ADU portfolio yourself.
Whether your interest lies in prefab homes, manufactured homes, or combining modular tech with rental strategy, we’re geared to help you explore ideas, get pricing, and design a path forward.
Your Gateway to an Affordable New Home in Colorado
Looking for modular homes, manufactured homes, or mobile homes for sale in Colorado Springs? We’ve got you covered. At Colorado Home Sales, we curate homes that meet Colorado’s unique demands. Browse listings now, discover financing options, and when you’re ready—call us to get started.
