Why add an ADU?

Generate Rental Income

There is no question that with today’s rental prices, homeowners who build ADUs have the potential to generate substantial income, which in many cases can pay for their entire project in a matter of a few years.

The rise of vacation rental platforms like Airbnb and VRBO have caused more and more property owners who have historically rented to long-term local tenants, to turn to short-term rental models to increase their rental income. This shift has inadvertently had a restrictive effect on rental housing supply as a whole and made more development for long-term, market rate rentals a necessity.

While vacation rentals provide the opportunity for increased profitability, they are also subject to some inconsistency due to seasonality and changing local regulations. Planning to lease your ADU as a long-term market rate rental will generate strong returns that are predictable and fully legalized.

Add Housing Stock

California needs housing more than ever before and ADUs arguably provide the clearest path to add housing in cities across the state. With over 6,000,000 single-family households throughout the state, and over 55% being occupied by the owner, ADUs present Californians the opportunity to collectively build millions of homes within our existing neighborhoods. Each homeowner who chooses to build an ADU is not only making a sound financial investment, but they are also contributing to solving our state’s housing challenges.

Increase Property Value

A long-term benefit of building an ADU is the value that it will add to your home over time. Many homeowners find that the cost to build an ADU, in the end, is actually less than their gain in equity value within a few years and in some cases immediately. While little data currently exists on the ADU market, early signs indicate that the returns homeowners generate could be higher than that of large-scale real estate developers, when both property appreciation, costs for land, and rental income are considered.

House Friends & Family

Commonly referred to as in-law suites or granny flats, ADUs provide homeowners with flexible space to support family and friends. Whether that means kids coming home from college or allowing elders to age in place, many homeowners’ long-term plans revolve around supporting their loved ones than a purely financial investment.

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