So you know you want to acquire a property and add an ADU. Maybe you plan to live in the main house and make some extra rental income from the ADU, or perhaps you are buying purely as an investment property where you will rent out both the primary home and the ADU. But now what? Where do you turn to find the right property? What’s the right sequence to tackle the scope of work, budget, financing, acquisition, design and build-out of the property? We can help. And if we can’t, we have the right connections in place to get you to the person who can (e.g. lenders, realtors, property managers…).
Why an ADU vs. other options?
Add an additional unit without re-zoning and with minimal city involvement. This means a faster process so you can start realizing better cash on cash returns.
We offer standard plans with proven build costs and rentability. Build essentially the same ADU on several different properties to keep build & maintenance costs down.
Nearly any single family property is a candidate for an ADU. Some neighborhoods offer better return profiles, but there is room to pick the market you want to focus on.
Why are ADUs a good investment?
Rental Income Opportunity. Granny flats are an in-demand rental class. A 750 sqft 2BR/2BA ADU that costs $210,000 to build can be rented for $2,800+ per month in much of Oceanside and Carlsbad. Annual cash on cash returns, especially with financed properties, are routinely 15-25% for ADUs.
Increased Property Value. Properties with an ADU sell for a premium since they include an income-producing unit and have more square footage of livable space on the property. Constructing an ADU on your property typically increases the resale value of the property, since the house will be appraised versus other homes with ADUs.
Tax Benefits. Owners can accumulate tax depreciation deductions on granny flats, even accelerating the depreciation to take advantage of tax benefits sooner. Talk to your accountant to see what benefits you may be eligible for in your situation.
Easy Exit Strategy. There is a strong market for properties with ADUs, since both investors and homeowners with extended families are interested in purchasing them. San Diego Realtors confirm that more buyers are looking for homes with granny flats.
What Makes A Good ADU Property?
Ideal ADU Property Characteristics
- Lot: Deep & flat (more space for ADU, lower site work costs)
- Location: 1/2 mile walking distance from bus stop (no parking required)
- Utilities: Public Sewer (new septic system is typically required for a new ADU)
Other Important Factors
- Local ADU regulations (some are more restrictive than state laws) – check your city’s ADU regulations here
- Zoning & setbacks
- Coastal zones (may require additional permitting)
- Alleyway access (for a more private ADU entrance)
- Unpermitted work on premises
We’ll help you navigate zoning details and requirements for your property and help you determine the feasibility for your ADU project.
The Complete Guide to Renting Your ADU in San Diego
What you need to know about renting out an accessory dwelling unit in San Diego, including what factors to consider before building, how to optimize design for rentals, and average rental rates by neighborhood.ADU Rental Guide