Free Tool
ADU ROI & Payback Calculator
Calculate your annual return on investment, payback period, and estimated property value increase. See whether building an ADU makes financial sense for your situation.
ADU Returns by Type
Not all ADUs are equal investments. Here is how the main types compare on typical California numbers.
| ADU Type | Typical Cost | Avg CA Rent | Est. Annual ROI |
|---|---|---|---|
| Garage Conversion | $80k–$150k | $1,500–$2,500 | 14–22% |
| JADU | $30k–$100k | $1,000–$2,000 | 12–20% |
| Attached ADU | $150k–$300k | $1,800–$3,500 | 7–14% |
| Detached ADU | $200k–$500k | $2,000–$4,500 | 5–12% |
Based on typical California market data. Results vary by city and market conditions.
ADU ROI Questions Answered
What is a typical ROI for an ADU in California?
Most California ADUs generate an annual cash-on-cash return of 5–15%, depending on build cost and local rents. In high-rent markets like San Francisco, Los Angeles, and San Diego, returns can exceed 12% annually. The ROI improves further when you factor in property value appreciation.
How long does it take to recoup the cost of an ADU?
The typical payback period is 8–15 years based on rental income alone. Garage conversions and JADUs — which cost far less to build — often pay back in 5–8 years. A $150,000 garage conversion generating $2,000/month in rent breaks even in about 6 years.
Does an ADU increase property value?
Yes. Most appraisers apply a 150–200x monthly rent multiplier to ADU income. An ADU generating $2,500/month could add $375,000–$500,000 to your property value — often exceeding the build cost in high-demand California markets.
Is renting an ADU worth it after taxes?
Rental income from an ADU is taxable, but you can deduct a proportional share of mortgage interest, property taxes, insurance, maintenance, and depreciation. Many ADU owners find their effective net yield after deductions is quite favorable. Consult a tax professional for your specific situation.
What ADU type has the best ROI?
Garage conversions typically deliver the best ROI because they reuse an existing structure, reducing construction costs significantly. A $100,000 garage conversion renting for $1,800/month has a 21.6% annual ROI. New detached ADUs have lower cash ROI but add more property value.
Turn Your Estimate Into Reality
Connect with licensed California ADU contractors to get real project costs.
Get Free Contractor Quotes