What does an ADU rent for by size?
Rent is the engine of the return, and it scales with size and submarket. The ranges below reflect long-term unfurnished tenancy in 2026. Established neighborhoods trend toward the top of each band; outer submarkets sit lower.
| Unit type | Size | Monthly rent |
|---|---|---|
| Studio / junior ADU | ≤ 500 sq ft | $1,100–$1,700 |
| 1 bedroom | 450–650 sq ft | $1,500–$2,200 |
| 2 bedroom | 700–1,000 sq ft | $2,100–$2,900 |
How does ADU ROI actually work?
Returns come from three places: monthly cash flow (rent minus the financed payment and holding costs), property appreciation over time, and a one-time resale lift when you sell. Cash flow is what you feel month to month; the resale lift is the quiet bonus, because a permitted, income-producing unit is valued as living space, not a shed.
How does payback work?
Payback is your all-in project cost divided by what the unit nets each year. Rent it, subtract roughly $400–$500 per month for property tax, insurance and maintenance, and what remains is the annual net that repays the build. Because a financed payment is fixed while rents rise, cash flow improves every year you hold the unit.
| Monthly rent | Gross annual rent | Annual net |
|---|---|---|
| $1,600 | $19,200 | ~$13,800 |
| $2,200 | $26,400 | ~$21,000 |
| $2,800 | $33,600 | ~$28,200 |
Divide your quoted project cost by that net figure to get simple payback in years. Enter your own numbers in the calculator below.
Not sure how this applies to your lot? We'll tell you what's buildable and what it costs — before you spend a dollar on design.
Estimate your own cash flow
Start with the rent your unit size commands locally, subtract your financed payment, then subtract holding costs — budget roughly $400–$500 per month on a typical detached unit. What's left is monthly cash flow. Run it once at a conservative rent and with one vacancy month to stress-test the number.
Quick ROI Calculator
Estimates only. Actual returns depend on local rents, financing, taxes and insurance.
What costs eat into your return?
Honest ROI accounts for the holding costs, not just the rent:
- Added property tax — roughly 1–1.25% of the unit's assessed value per year.
- Landlord insurance — a policy or rider on your homeowner's coverage.
- Maintenance and repairs — budget about 1% of build cost annually.
- Vacancy and turnover — the biggest avoidable drag on return.
How much does an ADU add to resale value?
Beyond rent, an ADU changes what your property is worth. Because appraisers treat a permitted unit as income-producing space, homes with one command a premium over comparable homes without. That premium plus normal appreciation often recovers a large share of the build cost before you count a single year of collected rent.
How do you rent it out after the build?
The return on paper only happens if the unit stays rented to good tenants. We're a builder, not a property manager — but we design the unit to rent well, and you get honest rent guidance before you build.
How do you maximize your ADU's return?
- Build a 2-bedroom where the lot allows it — the top rent band has the best payback.
- Keep the unit under 750 sq ft where that avoids impact fees entirely.
- Design for rentability: private entrance, in-unit laundry, durable finishes.
- Minimize vacancy — good management pays for itself in avoided empty months.
- Lock financing while rates are favorable so the fixed payment stays below market rent.
This guide is general information, not legal, financial or tax advice. ADU rules change often and vary by city — we confirm current requirements for your jurisdiction during your free feasibility check.