WHAT IS AN ADU?
ADU stands for Accessory Dwelling Unit. It’s a residential dwelling unit California lawmakers encourage you to build on your single family or multi-family properties. An ADU is complete with its own kitchen and bathroom and is designed to accommodate a separate family.
An additional Junior ADU (JADU) may be constructed if certain conditions are met. A single family home now may be turned into a 3 unit property.
Imagine what ONE or TWO additional units in your backyard can do:
California law allows you to legally rent out your ADU to tenants to collect rent. Depending on size and location, you may receive an additional $1500 to $2300 for a one-bedroom ADU and $2500 to $ 3200 for a two-bedroom unit.
or Site Meeting
HOW TO DO IT?
Timeline illustration is based on average of cases. Each project may vary by project.
PURCHASE ANOTHER HOUSE
Use $200k as downpayment
You can borrow another $800k
An average $1M house in the bay area can rent for $4,500
Your mortgage is $3,650/month at 3.65% interest
Property tax and insurance combined is roughly $1250/month
Negative cashflow: -$400
BUILD AN ADU
Use $200k to build a 2-bed-2-bath ADU
No need to borrow
An average 2-bed-2-bath ADU can rent for $2500/month
No mortgage payment
Increased property tax for a $200k ADU is around $220/month
Positive cashflow $2280/month