Add value through ADU conversion

[Marco Werner]

Hi all, 

I am looking at a duplex (1500 sqft), which has a large detached garage (~700 sqft floor area). 

I am thinking of adding 2 stories on top of the garage (essentially rebuilding the garage) and adding north of 1000 sqft livable space. The property is in LA and I am trying to think through how much value I am adding to the property. 

Is it fair to assume that the added sqft from the ADU conversion adds value to the property? Should I apply the simple math of average price per sqft in the area times the added sqft? Minus potentially a small discount since it's an ADU? The bank I have been talking to for the loan / construction loan seems to be willing to apply that logic.

Would love your thoughts!