How much new ADU build increase value of the home in california

[Suganya Vinayakam]

I'm currently constructing an ADU in Southern California. While I haven't remodeled the main house, it's situated in a highly desirable neighborhood. I'm interested in understanding the increase in value that the newly built ADU will bring to the current value of the property. will it be appraised for same cost per-sqt as like main house? Did anyone appraise the property / sold after adding adu?

[John Underwood]

I have land with a house and plan to build a a house for me to live in soon there. The mortgage guy told me the other house would be treated as an ADU and give me no real value towards the value of my future mortgage.

Not sure if that helps much?

You should talk to a local appraiser to get the best opinion.

[Rick Albert]

It all comes down to comps in a given neighborhood. Unfortunately there isn't a steadfast rule.

Regarding appraisals, I have seen it across a few different ways:

1. I have seen an appraiser include it as the square footage. I would recommend pushing back on this as there is more value as a stand alone feature (like a pool or guest house).

2. In the Valley, I have seen typically around $50,000 and on the Westside around $75,000. If this is an ultra high price, then obviously more.

3. The kicker is some appraisers will give negative value for not having a garage. On one of my appraisals, I received $50K for the ADU, but lost $10K for not having a garage.

You need to find comps with ADUs as appraisers need to have at least one.

[Dan Heuschele]

Quote from @Suganya Vinayakam:

I'm currently constructing an ADU in Southern California. While I haven't remodeled the main house, it's situated in a highly desirable neighborhood. I'm interested in understanding the increase in value that the newly built ADU will bring to the current value of the property. will it be appraised for same cost per-sqt as like main house? Did anyone appraise the property / sold after adding adu?

It is unlikely a refinance appraisal will give you the cost of a hands off ADU addition. This implies you start with an initial negative position. To recover the initial negative position will consume many months (usually years) of your cash flow.

Adding small units in small unit counts is expensive development. There is no more expensive residential development than adding single count ADU.

This results in hands off ADU additions being one of the worse RE investments. Here is a more complete list of reasons that a hands off ADU addition is not typically a good investment.
1) The value added by the ADU addition is often significantly less than the cost of adding the ADU. Search the BP for ADU appraisals to encounter numerous examples. This creates a negative initial position. This negative position can consume years of cash flow to recover. Make sure you know the value the ADU will add to the property before building the ADU.
2) The financing on an ADU is typically far worse than for initial investment property acq
uisition or is often not leveraged (HELOC, cash out refi, etc). Leverage magnifies return.
3) The effort involved in adding an ADU is comparable or larger than a rehab associated with a BRRRR. However if I do a BRRRR I can achieve infinite return by extracting all of my investment. Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).
4) Adding an ADU is a slow process. It can take a year or more to complete an ADU. During this time you are not generating any return from the money invested in the ADU. This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return.
5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space.
6) this is related to the value added by the ADU, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties. This may affect value or time required to sell.
7) Adding an ADU does not make the property a duplex. For example in many jurisdictions I can STR units in a duplex but cannot STR an ADU (some jurisdictions will let you STR if you owner occupy). Duplex have different zoning that may permit additional units. Duplex can always add additional units via the ADU laws.
8) Related to the value added by the ADU, purchasing a property with an existing ADU is cheaper than buying a property and adding an ADU. Why add an ADU if it can be purchased cheaper?
9) if CA an ADU and JADU can be added to virtually all homes. However, Freddie/Fannie will not finance a parcel with 2 ADUs. This lowers refinance options. It can potentially limit your buyers when/if you go to sell.
10) JADUs require OO. Note this is not only to rent the JADU, but in strictest interpretation to even have a legal JADU. This limits purchasers to house hackers significantly limiting the potential buyer. JADU are value subtract as they typically reduce the value of the RE and often best option at selling is to remove the JADU.
11) if the ADU is being added to a SFH, the ADU can make the house rent controlled (if it is over 15 years old). I do not believe this is the intent of the ADU laws, but many jurisdictions appear to be interpreting it differently than my opinion. See AB1482.

ADU laws were added to add housing. However building small unit count, small units is very expensive housing. It is resulting in increase to housing costs and poor returns for the hands off investor. Some jurisdictions recognize this and allow large number of ADUs which compounds the NIMBY against ADUs. For example in city of San Diego you can designate a few units as affordable units and build 15 units in a single family zoned area. No one wants 15 unit apartments built next door to their SFH.

good luck

[Alberto Cioni]

I think and ADU is the best investment in Los Angeles.

You have the land so no extra cost for the land. Great advantage.

To build a house the biggest cost in LA is to buy the land. It is so expensive here the land.

The ADU unit construction here is around $ 200K-250K for 2 bed and 2 bath. But then you can rent the ADU for about $ 40000-50000 per year. So in 5 years you have the money back and endless cash flow for the future.

And your house will be much more valuable for investors. 

[Bruce Woodruff]

@Alberto Cioni....you need to read @Dan Heuschele 's take on this . He is right.

Maybe a rare ADU makes that much in rent, but you're saying $4k per month for a 2/2?

And not every investor wants an ADU....

[Alberto Cioni]

I read it. 

In West Los Angeles, where I am building my ADU, the rent for a 2 bed and 2 bath goes from $ 3500 to $ 4000 per month.

In some new complex 2 bed and 2 bath goes for $ 5000.

Since the cost to build is reasonable around max 250 K I think is a good deal.

Where do you buy a 2 bed / 2 bath in LA for $ 250K?  Impossible

[Greg M.]

Quote from @Alberto Cioni:

The ADU unit construction here is around $ 200K-250K for 2 bed and 2 bath. But then you can rent the ADU for about $ 40000-50000 per year. So in 5 years you have the money back and endless cash flow for the future.

Your numbers fail to take in account several things. That $250K cost needs to come from somewhere. Borrowing that money @ 8% is a $20,000/year cost. Don't forget about your property taxes going up to account for that ADU. A $250K ADU = ~$3,125 more in property taxes.

I'm not sure where you're getting $3,334 - $4,167 a month for a 1,200 sq ft ADU. Los Angeles's own numbers show that ADUs are not being built in high rent locations. They're being built in places like Sylmar, Panorama City, and Sun Valley. Lots of them available for under $2K. Even in the nice locations, most top out around $2,800.

Of course there is also your increased insurance, vacancy, repairs, CapEx, and the never mentioned reduced rent on the main house since having a stranger living in your backyard usually isn't appealing to most renters.

No way it's paid off in 5 years. You're likely cashflow negative for the first few years. 

ADUs are a dud. One report I saw said that something like 80% of the ADUs built were to house parents/children of the homeowner and were not being rented out. They just aren't that profitable. 

[Rick Albert]

Quote from @Greg M.:

Quote from @Alberto Cioni:

The ADU unit construction here is around $ 200K-250K for 2 bed and 2 bath. But then you can rent the ADU for about $ 40000-50000 per year. So in 5 years you have the money back and endless cash flow for the future.

Your numbers fail to take in account several things. That $250K cost needs to come from somewhere. Borrowing that money @ 8% is a $20,000/year cost. Don't forget about your property taxes going up to account for that ADU. A $250K ADU = ~$3,125 more in property taxes.

I'm not sure where you're getting $3,334 - $4,167 a month for a 1,200 sq ft ADU. Los Angeles's own numbers show that ADUs are not being built in high rent locations. They're being built in places like Sylmar, Panorama City, and Sun Valley. Lots of them available for under $2K. Even in the nice locations, most top out around $2,800.

Of course there is also your increased insurance, vacancy, repairs, CapEx, and the never mentioned reduced rent on the main house since having a stranger living in your backyard usually isn't appealing to most renters.

No way it's paid off in 5 years. You're likely cashflow negative for the first few years. 

ADUs are a dud. One report I saw said that something like 80% of the ADUs built were to house parents/children of the homeowner and were not being rented out. They just aren't that profitable. 

Obviously it is neighborhood specific but for me and every ADU client that I have where they rented both the house and ADU, they never gave a discount for the main house. These have all been in the San Fernando Valley.

In luxury neighborhoods (Westwood, Santa Monica, etc. for example) that might be different as tenants have a higher expectation given the rents.

[Alberto Cioni]

Greg

you are right to add them.

But if you build a house you have to add the same costs of course. 

In my case the ADU is in Marina del Rey area in a Duplex lot that I am renting out now. I rented the one bedroom one bath few months ago for $ 2750. The renter is aware of the ADU.

So I will have a triplex. I am pretty sure I can rent it out for $ 3500 because is new and nice. Also They are building close by a new Cedar Sinai Hospital. And while S Monica is getting worst my area, called Silycon Beach is booming...

I see this a great deal for me. 

[Bonnie Griffin Kaake]

@Suganya Vinayakam There are many different opinions on the value of an ADU. Yes, they cost more to build and the ROI takes a long time. On the other hand, with the price of real estate today, it is difficult for our children to be able to afford their own homes. If the ADU is part of the parents' property, it can be a blessing. The adult child would not likely be able to afford to purchase in the neighborhood where the parents live.

For seniors, living in an ADU on their children's property sure beats a $7K/mo assisted living center and still gives them independence.

There is a lot of push-back coming from HOAs in today's real estate market regarding ADUs. This is for many reasons, some legitimate and others just excuses or racial profiling in a different form. Please don't shoot the messenger.

The severe housing shortage is increasing housing density from coast to coast. There are no easy solutions. What I am seeing is older residential units being purchased, eventually torn down and upscale apartments replacing them. In my opinion, it has already started, we are going to see single family residential zoning going away. Those who get on board earlier are going to be the winners of the future. I work with one client in CA, who is buying up small houses on bigger lots and adding ADUs quite successfully. 

Here is a simplified calculation that some may be interested in: ADU cost $200K, annual rental $21,600 ($1,800 per month) = almost 11% per year. Just try to get that interest rate from a bank.

[Greg M.]

Quote from @Bonnie Griffin Kaake:

Here is a simplified calculation that some may be interested in: ADU cost $200K, annual rental $21,600 ($1,800 per month) = almost 11% per year. Just try to get that interest rate from a bank.

That calculation is so simplified that it doesn't even bother to factor into the equation any costs  and that $200K just magically appears out of thin air. 

In my world, capital costs money. Even if I have the cash, there is an opportunity cost to using that cash. 

[Alberto Cioni]

Quote from @Bonnie Griffin Kaake:

@Suganya Vinayakam There are many different opinions on the value of an ADU. Yes, they cost more to build and the ROI takes a long time. On the other hand, with the price of real estate today, it is difficult for our children to be able to afford their own homes. If the ADU is part of the parents' property, it can be a blessing. The adult child would not likely be able to afford to purchase in the neighborhood where the parents live.

For seniors, living in an ADU on their children's property sure beats a $7K/mo assisted living center and still gives them independence.

There is a lot of push-back coming from HOAs in today's real estate market regarding ADUs. This is for many reasons, some legitimate and others just excuses or racial profiling in a different form. Please don't shoot the messenger.

The severe housing shortage is increasing housing density from coast to coast. There are no easy solutions. What I am seeing is older residential units being purchased, eventually torn down and upscale apartments replacing them. In my opinion, it has already started, we are going to see single family residential zoning going away. Those who get on board earlier are going to be the winners of the future. I work with one client in CA, who is buying up small houses on bigger lots and adding ADUs quite successfully. 

Here is a simplified calculation that some may be interested in: ADU cost $200K, annual rental $21,600 ($1,800 per month) = almost 11% per year. Just try to get that interest rate from a bank.

Agree. My bonds will never give me so much and then the ADU will increase its value in the LA market....

[Dan Heuschele]

Quote from @Alberto Cioni:

I read it. 

In West Los Angeles, where I am building my ADU, the rent for a 2 bed and 2 bath goes from $ 3500 to $ 4000 per month.

In some new complex 2 bed and 2 bath goes for $ 5000.

Since the cost to build is reasonable around max 250 K I think is a good deal.

Where do you buy a 2 bed / 2 bath in LA for $ 250K?  Impossible

You do not state the source of funds but let's go with probably the cheapest option of a cash out refi (note this relies on having equity to do so). $250k, 30 year, 6.875% is $1,642. Note this is cheapest money around and maximizes COC.

Now use 50% expense rule implies $2k expenses not including mortgage service.  

cash flow with $4k rent finance via refi (cheapest fixed rate available, maximizes COC) using 50% rule places the cash flow at $348/month that we will use $350.

Note at $3.5 k rent same criteria, $3500 - $1632 - 1750 is only $118/month. That would be crazy considering the SFH may become rent controlled. It also would take forever to recover the initial negative equity position.

Now the value set be appraisers typically is coming in between $50k and $100k   I invite you to search BP or create a post determining values that appraisers are giving to ADUs.  We will use the high end of this range ($100k)   This implies the initial negative equity position is $150k  

$150k (initial negative position)/$350 (cash flow) takes 428 months to recover the initial negative position (35 years).  

Add in many/most jurisdictions are (I believe incorrectly applying the law) mandating the existing structure be rent controlled (assuming it is over 15 years old).

The reality is virtually all RE investments will do better than adding an ADU. I will say this is a difficult RE market and I can poke holes in most RE purchases at this time. It is a big reason my last purchases were Dec 2021 when the rates were less than half of the current rates (I purchased $4m that month that I have already made ~$1m from). I make offers but they are not accepted. My point is it is a difficult RE market, but adding an ADU is a terrible investment. Better to purchase RE with an existing ADU. Better to do virtually any RE investment.

I recognize it is a tough RE market with many challenges.   But the goal is to make money.  I have made a lot of money in RE (8 digits) and have not purchased in over 2 years.  

Best wishes

[Suganya Vinayakam]

Thanks for all your input. @Alberto Cioni Mine in South Bay. Did you appraise your property after completing your adu build? I read some articles stating that it appraise 100times of rent sometimes appraiser appraised it based on income generated by that unit. is that true statement?

[Dan Heuschele]

Quote from @Suganya Vinayakam:

Thanks for all your input. @Alberto Cioni Mine in South Bay. Did you appraise your property after completing your adu build? I read some articles stating that it appraise 100times of rent sometimes appraiser appraised it based on income generated by that unit. is that true statement?

Less than 5 units will not be based on income if using conventional financing.  Many (probably most) appraisals includes an income approach, but it is informative only.   The value used will come from the comp approach.   

good luck

[Carlos Ptriawan]

Quote from @Suganya Vinayakam:

I'm currently constructing an ADU in Southern California. While I haven't remodeled the main house, it's situated in a highly desirable neighborhood. I'm interested in understanding the increase in value that the newly built ADU will bring to the current value of the property. will it be appraised for same cost per-sqt as like main house? Did anyone appraise the property / sold after adding adu?

 maybe about 40% per PPSF of main building that's what the appraisar use, it's losing money game.

[Daniel H.]

Quote from @Greg M.:

Quote from @Alberto Cioni:

The ADU unit construction here is around $ 200K-250K for 2 bed and 2 bath. But then you can rent the ADU for about $ 40000-50000 per year. So in 5 years you have the money back and endless cash flow for the future.

Your numbers fail to take in account several things. That $250K cost needs to come from somewhere. Borrowing that money @ 8% is a $20,000/year cost. Don't forget about your property taxes going up to account for that ADU. A $250K ADU = ~$3,125 more in property taxes.

I'm not sure where you're getting $3,334 - $4,167 a month for a 1,200 sq ft ADU. Los Angeles's own numbers show that ADUs are not being built in high rent locations. They're being built in places like Sylmar, Panorama City, and Sun Valley. Lots of them available for under $2K. Even in the nice locations, most top out around $2,800.

Of course there is also your increased insurance, vacancy, repairs, CapEx, and the never mentioned reduced rent on the main house since having a stranger living in your backyard usually isn't appealing to most renters.

No way it's paid off in 5 years. You're likely cashflow negative for the first few years. 

ADUs are a dud. One report I saw said that something like 80% of the ADUs built were to house parents/children of the homeowner and were not being rented out. They just aren't that profitable. 

I'm calling for final on a converted garage next week. In NELA it will bring in over $2k/mo, it cost $110k to build(sweat equity obviously). Maybe this is neighborhood specific, but most of the SFH within a few square miles of me sell with ADU price per square foot the same as the main house.

[Daniel H.]

Quote from @Suganya Vinayakam:

I'm currently constructing an ADU in Southern California. While I haven't remodeled the main house, it's situated in a highly desirable neighborhood. I'm interested in understanding the increase in value that the newly built ADU will bring to the current value of the property. will it be appraised for same cost per-sqt as like main house? Did anyone appraise the property / sold after adding adu?

If you're looking for appraisal value an ADU may not be the best bet, but if you intend to sell, my anecdotal evidence suggests in dense highly desirable neighborhoods, ADU square footage will gross the same as the main house.

[Brandon Leong]

Quote from @Daniel H.:

Quote from @Greg M.:

Quote from @Alberto Cioni:

The ADU unit construction here is around $ 200K-250K for 2 bed and 2 bath. But then you can rent the ADU for about $ 40000-50000 per year. So in 5 years you have the money back and endless cash flow for the future.

Your numbers fail to take in account several things. That $250K cost needs to come from somewhere. Borrowing that money @ 8% is a $20,000/year cost. Don't forget about your property taxes going up to account for that ADU. A $250K ADU = ~$3,125 more in property taxes.

I'm not sure where you're getting $3,334 - $4,167 a month for a 1,200 sq ft ADU. Los Angeles's own numbers show that ADUs are not being built in high rent locations. They're being built in places like Sylmar, Panorama City, and Sun Valley. Lots of them available for under $2K. Even in the nice locations, most top out around $2,800.

Of course there is also your increased insurance, vacancy, repairs, CapEx, and the never mentioned reduced rent on the main house since having a stranger living in your backyard usually isn't appealing to most renters.

No way it's paid off in 5 years. You're likely cashflow negative for the first few years. 

ADUs are a dud. One report I saw said that something like 80% of the ADUs built were to house parents/children of the homeowner and were not being rented out. They just aren't that profitable. 

I'm calling for final on a converted garage next week. In NELA it will bring in over $2k/mo, it cost $110k to build(sweat equity obviously). Maybe this is neighborhood specific, but most of the SFH within a few square miles of me sell with ADU price per square foot the same as the main house.

Hey Daniel, I have a triplex in Silverlake and am (thinking about) converting an existing storage room into an ADU. I am in the process of vetting contractors - I know you used a lot of sweat equity but did you use a contractor? If so, do you recommend them? Also, how many sqft was your conversion?

[Chris John]

Quote from @Dan Heuschele:

The reality is virtually all RE investments will do better than adding an ADU. I will say this is a difficult RE market and I can poke holes in most RE purchases at this time. It is a big reason my last purchases were Dec 2021 when the rates were less than half of the current rates (I purchased $4m that month that I have already made ~$1m from). I make offers but they are not accepted. My point is it is a difficult RE market, but adding an ADU is a terrible investment. Better to purchase RE with an existing ADU. Better to do virtually any RE investment.

I recognize it is a tough RE market with many challenges.   But the goal is to make money.  I have made a lot of money in RE (8 digits) and have not purchased in over 2 years.  

Best wishes

I logged in just to like this post.  Excellent advice and very well stated, imo.

I have some really good candidates for ADUs in California. Older homes on big lots in rental neighborhoods. When I ran the numbers, I ended up buying 4plexes in Jacksonville instead. Each pile of $200k got me 25% down and some money towards renovations on two 4plexes generating $8800/mo instead of one ADU generating $1800. I was also able to acquire $750k of real estate using leverage (now worth $1M).

Another great point is that this happened in 2020/2021.  If you're not already extremely well connected, buy some index funds (or the next Nvidia - maybe the current Nvidia still?  No idea...) or park your money in a money market fund.  Real estate is too much work to not be getting absolutely killer deals (and there's not that many available right now).

[Brandon Leong]

What are folks seeing for cost per square foot for ADU conversions? As preivously stated above, I have a small storage space (around 200 sqft) that can be converted into an ADU (already have approved plans from LADBS) and am meeting with various contractors and teams. I am seeing quotes around $120k which would put that cost per square foot around $600 which seems a lot compared to what I have seen/read online

[Daniel H.]

Quote from @Brandon Leong:

Quote from @Daniel H.:

Quote from @Greg M.:

Quote from @Alberto Cioni:

The ADU unit construction here is around $ 200K-250K for 2 bed and 2 bath. But then you can rent the ADU for about $ 40000-50000 per year. So in 5 years you have the money back and endless cash flow for the future.

Your numbers fail to take in account several things. That $250K cost needs to come from somewhere. Borrowing that money @ 8% is a $20,000/year cost. Don't forget about your property taxes going up to account for that ADU. A $250K ADU = ~$3,125 more in property taxes.

I'm not sure where you're getting $3,334 - $4,167 a month for a 1,200 sq ft ADU. Los Angeles's own numbers show that ADUs are not being built in high rent locations. They're being built in places like Sylmar, Panorama City, and Sun Valley. Lots of them available for under $2K. Even in the nice locations, most top out around $2,800.

Of course there is also your increased insurance, vacancy, repairs, CapEx, and the never mentioned reduced rent on the main house since having a stranger living in your backyard usually isn't appealing to most renters.

No way it's paid off in 5 years. You're likely cashflow negative for the first few years. 

ADUs are a dud. One report I saw said that something like 80% of the ADUs built were to house parents/children of the homeowner and were not being rented out. They just aren't that profitable. 

I'm calling for final on a converted garage next week. In NELA it will bring in over $2k/mo, it cost $110k to build(sweat equity obviously). Maybe this is neighborhood specific, but most of the SFH within a few square miles of me sell with ADU price per square foot the same as the main house.

Hey Daniel, I have a triplex in Silverlake and am (thinking about) converting an existing storage room into an ADU. I am in the process of vetting contractors - I know you used a lot of sweat equity but did you use a contractor? If so, do you recommend them? Also, how many sqft was your conversion?

I did Owner/Builder, its 300 sqft, it would have cost $150k without the sweat equity. I have awesome subs(foundation, framing, plumbing) I work with for the heavy lifting. If you want their details DM me. I also know a GC that can get the job done well and an architect who isn't cheap but is GREAT with ADUs.

[Daniel H.]

Quote from @Brandon Leong:

What are folks seeing for cost per square foot for ADU conversions? As preivously stated above, I have a small storage space (around 200 sqft) that can be converted into an ADU (already have approved plans from LADBS) and am meeting with various contractors and teams. I am seeing quotes around $120k which would put that cost per square foot around $600 which seems a lot compared to what I have seen/read online

The reason your cost per square foot is so high is you still have to add all the things a regular house has but in a smaller space. All your mechanical will be about the same as if you were building a much larger house. $120k for 200 sqft seems reasonable.

[Brandon Leong]

Quote from @Daniel H.:

Quote from @Brandon Leong:

What are folks seeing for cost per square foot for ADU conversions? As preivously stated above, I have a small storage space (around 200 sqft) that can be converted into an ADU (already have approved plans from LADBS) and am meeting with various contractors and teams. I am seeing quotes around $120k which would put that cost per square foot around $600 which seems a lot compared to what I have seen/read online

The reason your cost per square foot is so high is you still have to add all the things a regular house has but in a smaller space. All your mechanical will be about the same as if you were building a much larger house. $120k for 200 sqft seems reasonable.

 Okay makes sense. Makes me feel better to know that I am not getting ripped off lol

[Carlos Ptriawan]

Quote from @Chris John:

Quote from @Dan Heuschele:

The reality is virtually all RE investments will do better than adding an ADU. I will say this is a difficult RE market and I can poke holes in most RE purchases at this time. It is a big reason my last purchases were Dec 2021 when the rates were less than half of the current rates (I purchased $4m that month that I have already made ~$1m from). I make offers but they are not accepted. My point is it is a difficult RE market, but adding an ADU is a terrible investment. Better to purchase RE with an existing ADU. Better to do virtually any RE investment.

I recognize it is a tough RE market with many challenges.   But the goal is to make money.  I have made a lot of money in RE (8 digits) and have not purchased in over 2 years.  

Best wishes

I logged in just to like this post.  Excellent advice and very well stated, imo.

I have some really good candidates for ADUs in California. Older homes on big lots in rental neighborhoods. When I ran the numbers, I ended up buying 4plexes in Jacksonville instead. Each pile of $200k got me 25% down and some money towards renovations on two 4plexes generating $8800/mo instead of one ADU generating $1800. I was also able to acquire $750k of real estate using leverage (now worth $1M).

Another great point is that this happened in 2020/2021.  If you're not already extremely well connected, buy some index funds (or the next Nvidia - maybe the current Nvidia still?  No idea...) or park your money in a money market fund.  Real estate is too much work to not be getting absolutely killer deals (and there's not that many available right now).

rental vs adu , rental always wins because gross PPSF-appraisal/rent of ADU is less than PPSF-for-rent for regular rent.

and with the available of homes already has converted room (and ADU) makes building adu is a moot point.

i would just even buy SF with 6-7 rooms