Founder story
Why build an ADU? My reason for doing the math
The ADUroi origin story: a retirement goal, hard-to-compare contractor estimates, and a decision that required more than a rent number.
Planning information only. Confirm local requirements and review financing, tax treatment, scope, and costs with the appropriate professionals.
In 2018, I decided to buy my first investment property in Southern California. My goal was to increase my income during retirement. This is the experience behind ADUroi, originally shared in October 2020.
I thought an ADU could help offset the mortgage, property tax, and maintenance expenses. Before moving forward, I needed to understand the construction cost, likely rent, timing, and cash required. A rent estimate on its own was not enough.
The quotes were hard to compare
I had done remodeling projects, but converting a detached garage into a home felt different. Contractors sometimes saw it as a small project. To me, it was a substantial investment.
I spent six months meeting contractors and getting bids. Different scopes made the totals hard to compare, and I almost decided not to build. I needed enough cash for the contractor as well as fees, taxes, and permits, including work that might not appear in the first estimate.
That is why I built a financial comparison. I wanted to see what the property could look like with and without the ADU, rather than assume the extra rent would justify the expense.
What happened on my project
My contractor converted a detached garage into a two-bedroom, one-bath ADU in three months. I rented it within weeks of completion. Those are details from my original story, not a forecast for another property or today's rental market.
The unit gave tenants a home in a residential neighborhood with a yard and room for pets. Other owners may value space for family more than rental income. The reason for building changes what a successful outcome looks like.
What I would check before starting again
Compare the scope behind each bid. Ask what has not been inspected, which costs are allowances, and who carries the risk if utility work or site conditions change. Keep contingency visible, but do not treat any single percentage as a rule for every project.
Then test the financial comparison at a higher cost, lower rent, and later opening date. A project can look reasonable over a long holding period while creating a cash shortfall before the first tenant moves in.
Editorial correction and next reading
The original post made broad statements about unavailable ADU financing and rental rules. Those statements have been removed. Fannie Mae now describes mortgage options for buying, renovating, or adding ADUs, subject to eligibility. Rental restrictions depend on the applicable rules; check the jurisdiction rather than relying on a story about my project.
Read how to finance an ADU and how to compare construction-cost ranges.