Tool · ROI
Build it.
Make it pay.
What an ADU actually returns — cash flow, equity buildup, and the appraisal lift on the main home — across 30 years and the assumptions you can actually defend.
What you'll learn
- → Cash-on-cash return
- → Monthly cash flow waterfall
- → Break-even year
- → 30-yr wealth buildup
ADU ROI FAQ
- Does an ADU actually add value to the main home?
- Yes. The widely-cited rule of thumb across appraisers is that a permitted ADU adds 25–40% of its build cost to the appraised value of the property, in addition to producing rental income. The exact uplift varies by market — high-rent markets (Bay Area, LA, Seattle) tend to capture more value than low-rent markets.
- Is renting an ADU short-term (Airbnb) better than long-term?
- It depends on local rules and your tolerance for hands-on management. Short-term rentals can generate 1.5–2.5× the gross of long-term in tourist-heavy markets, but many cities now restrict or ban short-term ADU rentals. Long-term rental is simpler, more predictable, and what most lenders underwrite to when valuing your ADU for appraisal purposes.
- What operating expenses should I budget for?
- A reasonable default is 15% of gross rent, covering property taxes (allocated), insurance bump, maintenance, vacancy reserves, and any utilities not paid by the tenant. Newer ADUs trend lower on maintenance for the first 5–7 years; budget closer to 20% on conversions and older builds.