How to Build a Rental Unit or Granny Flat in Your Backyard

To ease the housing crunch, the city of L.A. is making it easier for homeowners to build “accessory dwelling units.”

In the hills of Highland Park, Trent Wolbe is standing where his new home is being built. A two-story, 1,024-square-foot two-bedroom house, it’ll be 27 by 17 feet at the base—tight but just right considering that he’s squeezing this into the backyard of the Craftsman bungalow he shares with his partner and four-year-old daughter.

Wolbe’s is a pilot project sponsored by Mayor Eric Garcetti’s Innovation Team, a consultancy within city hall. They’re hoping to show how underutilized land can be converted to create more residential space—as well as additional income for property owners. “Since we started doing this, all of my neighbors have been like, ‘Hey, can we get in touch with them? I’ve been wanting to do this forever,’” says Wolbe, who designs the spaces companies set up for events like South by Southwest.

In L.A., where a growing population is faced with rising rents and a dearth of affordable homes, backyard houses—known in the urban planning lexicon as accessory dwelling units, or ADUs—are seen as a simple tool to chip away at the problem. ...