How Much Does An ADU Rent For?

October 29, 2020

When you are looking to build an Accessory Dwelling Unit (ADU) aka Carriage House aka Granny Flat, one of the most critical elements to determine if your investment is financially worthwhile is to determine how much the ADU can be rented out for.

In the App.ADUROI.com tool, we allow you to input and change your numbers so you will need to determine what rents go for in your neighborhood to get an accurate view.

Here is how we think about it:

Go to a website like Zillow or Trulia to find rents in your area.
Look for the same number of bedrooms and baths.
When thinking about square footage, look to apartments nearby. When you create an ADU, you are providing someone with a “home” and perhaps that comes with private parking and private outdoor space. This is a premium over an apartment. Compare also with other ADU’s in your neighborhood. An ADU is generally much smaller than a home on the property but now, in the state of CA, you can go up to 1,200 sq. feet so considerably bigger than in the past.
Your ADU is brand NEW! That means it will likely be more appealing than an older apartment or home. Market it that way in your listing to potential renters.

Example:

Location: Oceanside, CA - Residential Neighborhood

Main House: 1,200 square foot 3 bd/1 bath

Rent: $2,950

ADU: 700 square foot 2 bd/1 bath with private grass yard

Rent: $2,200

The ADU is being rented for 75% of the main house unit.

Compelling, isn’t it? It’s brand new and 2 bd is a benefit over a 1 bd because it can accommodate roommates to split the cost or for a couple or a small family. The pool of candidates opens up to other living situations that a studio and 1 bd don’t accommodate.

Written by the ADUROI Team, to help you understand if an ADU makes financial sense.