For a lot of you, whether to build an ADU or not depends on the resale value/appraised value after the ADU construction. The same applies to me - I personally built an attached 630 sqft ADU in San Jose back in 2019 (more details here: https://www.biggerpockets.com/...) and I'm now building a detached 1,200 sqft ADU in Santa Clara (more details here: https://www.biggerpockets.com/...), so I constantly track the transaction values for SFHs with ADUs in the Bay Area.

I found some recent transactions data (almost all from second quarter of 2021) in the bay area that might be of interest to you:

You can see that in all of these cases (whether with detached or attached ADUs), ADU added more value than the estimated construction cost, which shows that building an ADU can be a proven strategy for bay area home owners to not only improve cash flow, but also immediately add equity value. Buyers are willing to pay $$$ for additional flexible spaces that can be used as office, gym, guest home for elderly parents or adult kids, or simply as rental to help pay off the mortgage. This might not apply to other lower-cost areas, so please do your own research if you are in areas like SoCal or Portland.

However, I do think that one of the biggest mistakes when building an ADU is to overspend on an ADU. You definitely want to make sure your construction cost doesn't exceed the potential value an ADU can add. So picking the right ADU design and the right team to work with is critical. Let me know if you are looking for referrals.

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Recent transactions for SFHs with ADUs in the Bay Area

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