ADU Rental Income Calculator: How Much Can You Earn in Los Angeles?
Building an ADU is one of the smartest investments you can make on your Los Angeles property. But how much rental income can you realistically expect? This comprehensive guide breaks down ADU rental rates across LA neighborhoods, helps you calculate your potential earnings, and provides tools to analyze your return on investment.
Quick ADU Income Snapshot
|
ADU Size |
Average LA Rent |
Annual Income |
Typical Construction Cost |
|---|---|---|---|
|
Studio (400-500 sq ft) |
$1,500 – $2,200/mo |
$18,000 – $26,400/year |
$100,000 – $150,000 |
|
1 Bedroom (600-800 sq ft) |
$1,800 – $2,800/mo |
$21,600 – $33,600/year |
$150,000 – $225,000 |
|
2 Bedroom (900-1,200 sq ft) |
$2,400 – $3,500/mo |
$28,800 – $42,000/year |
$200,000 – $300,000 |
Los Angeles ADU Rental Rates by Neighborhood (2025)
Westside & Beach Communities
|
Neighborhood |
Studio ADU |
1 BR ADU |
2 BR ADU |
|---|---|---|---|
|
Santa Monica |
$2,200 – $2,800 |
$2,800 – $3,500 |
$3,500 – $4,200 |
|
Venice |
$2,000 – $2,600 |
$2,600 – $3,300 |
$3,200 – $4,000 |
|
West LA / Mar Vista |
$1,900 – $2,500 |
$2,400 – $3,100 |
$3,000 – $3,800 |
|
Culver City |
$1,900 – $2,500 |
$2,500 – $3,200 |
$3,100 – $3,900 |
|
Pacific Palisades |
$2,100 – $2,700 |
$2,700 – $3,400 |
$3,400 – $4,200 |
Central Los Angeles
|
Neighborhood |
Studio ADU |
1 BR ADU |
2 BR ADU |
|---|---|---|---|
|
Mid-City / Fairfax |
$1,700 – $2,300 |
$2,100 – $2,700 |
$2,700 – $3,400 |
|
Hollywood |
$1,600 – $2,200 |
$2,000 – $2,600 |
$2,600 – $3,300 |
|
Los Feliz |
$1,800 – $2,400 |
$2,300 – $2,900 |
$2,900 – $3,600 |
|
Silver Lake |
$1,900 – $2,500 |
$2,400 – $3,000 |
$3,000 – $3,700 |
|
Echo Park |
$1,700 – $2,300 |
$2,200 – $2,800 |
$2,800 – $3,400 |
|
Koreatown |
$1,500 – $2,100 |
$1,900 – $2,500 |
$2,500 – $3,100 |
San Fernando Valley
|
Neighborhood |
Studio ADU |
1 BR ADU |
2 BR ADU |
|---|---|---|---|
|
Studio City |
$1,800 – $2,400 |
$2,300 – $2,900 |
$2,900 – $3,600 |
|
Sherman Oaks |
$1,700 – $2,300 |
$2,200 – $2,800 |
$2,800 – $3,500 |
|
Encino |
$1,700 – $2,300 |
$2,200 – $2,800 |
$2,800 – $3,500 |
|
North Hollywood |
$1,500 – $2,000 |
$1,900 – $2,500 |
$2,500 – $3,100 |
|
Van Nuys |
$1,400 – $1,900 |
$1,800 – $2,400 |
$2,300 – $2,900 |
|
Woodland Hills |
$1,600 – $2,200 |
$2,100 – $2,700 |
$2,700 – $3,300 |
Eastside
|
Neighborhood |
Studio ADU |
1 BR ADU |
2 BR ADU |
|---|---|---|---|
|
Pasadena |
$1,600 – $2,200 |
$2,100 – $2,700 |
$2,700 – $3,300 |
|
Glendale |
$1,600 – $2,100 |
$2,000 – $2,600 |
$2,600 – $3,200 |
|
Highland Park |
$1,500 – $2,000 |
$1,900 – $2,500 |
$2,500 – $3,100 |
|
Eagle Rock |
$1,600 – $2,100 |
$2,000 – $2,600 |
$2,600 – $3,200 |
South Los Angeles
|
Neighborhood |
Studio ADU |
1 BR ADU |
2 BR ADU |
|---|---|---|---|
|
Inglewood |
$1,400 – $1,900 |
$1,800 – $2,300 |
$2,300 – $2,800 |
|
Leimert Park |
$1,300 – $1,800 |
$1,700 – $2,200 |
$2,200 – $2,700 |
|
View Park-Windsor Hills |
$1,500 – $2,000 |
$1,900 – $2,400 |
$2,400 – $2,900 |
|
South LA (general) |
$1,200 – $1,700 |
$1,600 – $2,100 |
$2,100 – $2,600 |
Factors That Affect ADU Rental Rates
1. Location & Neighborhood Amenities
- Transit Access: +$200-$400/mo near Metro stations
- Walkability: +$150-$300/mo in high walk-score areas
- School Districts: +$200-$500/mo in top-rated school zones
- Beach Proximity: +$300-$600/mo within 1 mile of beach
- Shopping/Dining: +$100-$250/mo near popular commercial districts
2. ADU Features & Finishes
- Modern Kitchen: +$150-$300/mo (quartz counters, stainless appliances)
- In-Unit Laundry: +$100-$200/mo
- Central AC: +$100-$150/mo
- Parking Space: +$150-$300/mo (especially on Westside)
- Outdoor Space: +$100-$250/mo (private patio/yard)
- High-End Finishes: +$200-$400/mo (luxury bathrooms, hardwood floors)
3. ADU Type & Configuration
|
ADU Type |
Rental Premium |
Reason |
|---|---|---|
|
Detached ADU |
Baseline / +10-15% |
Maximum privacy, standalone appeal |
|
Attached ADU |
Baseline |
Good value, some shared walls |
|
Garage Conversion |
-5% to baseline |
Sometimes lower ceilings or odd layouts |
|
Two-Story ADU |
+5-10% |
Better separation of living/sleeping areas |
|
JADU |
-15-25% |
Shared facilities, smaller size |
4. Seasonal & Market Factors
- Summer (May-Aug): Peak rental season, highest rates
- Winter (Nov-Jan): Slower season, 5-10% lower rates
- New Construction: Can charge premium for first 1-2 years
- Furnished: +25-40% for fully furnished short-term rentals
- Utilities Included: -$150-$250 from tenant perspective (but you pay)
Calculate Your ADU Rental Income Potential
Step-by-Step Calculation
Example: 800 sq ft 1-Bedroom ADU in Mid-City
- Base Rent (from neighborhood table): $2,100 – $2,700/mo
- Take midpoint: $2,400/mo
- Adjustments:
- Detached ADU: +$200
- Modern kitchen: +$150
- In-unit laundry: +$150
- Private patio: +$100
- Adjusted Monthly Rent: $2,400 + $600 = $3,000/mo
- Annual Gross Income: $3,000 × 12 = $36,000/year
Account for Vacancy & Expenses
|
Expense Category |
Typical Amount |
Annual Cost |
|---|---|---|
|
Vacancy (5-8%) |
~0.6 months/year |
-$1,800 |
|
Property Management (if used) |
8-10% of rent |
-$2,880 |
|
Maintenance Reserve |
$100-150/mo |
-$1,500 |
|
Insurance (landlord policy) |
$400-800/year |
-$600 |
|
Utilities (if owner pays) |
$80-150/mo |
-$1,200 |
|
Property Tax Increase |
Varies |
-$1,000 |
|
Total Annual Expenses |
-$8,980 |
Net Operating Income: $36,000 – $8,980 = $27,020/year
Return on Investment (ROI) Calculations
Simple ROI Formula
ROI = (Annual Net Income ÷ Total Construction Cost) × 100
Example Scenarios
|
ADU Size/Type |
Construction Cost |
Annual Net Income |
Simple ROI |
Payback Period |
|---|---|---|---|---|
|
500 sq ft Studio (Valley) |
$125,000 |
$16,000 |
12.8% |
7.8 years |
|
600 sq ft 1BR (Mid-City) |
$165,000 |
$21,500 |
13.0% |
7.7 years |
|
800 sq ft 1BR (Westside) |
$200,000 |
$27,000 |
13.5% |
7.4 years |
|
1,000 sq ft 2BR (Santa Monica) |
$275,000 |
$35,000 |
12.7% |
7.9 years |
|
1,200 sq ft 2BR (Venice) |
$300,000 |
$38,500 |
12.8% |
7.8 years |
Cash-on-Cash Return (If Financed)
Example: $200,000 ADU with $50,000 down payment
- Loan Amount: $150,000
- Interest Rate: 7.5% (ADU loan typical rate)
- Loan Term: 15 years
- Monthly Payment: $1,390
- Annual Debt Service: $16,680
Cash Flow Calculation:
- Annual Gross Income: $36,000
- Operating Expenses: -$8,980
- Debt Service: -$16,680
- Annual Cash Flow: $10,340
Cash-on-Cash Return: $10,340 ÷ $50,000 = 20.7%
This shows how financing can significantly boost your return on actual cash invested!
Long-Term Value Appreciation
Property Value Increase
- ADUs typically add 15-30% to total property value
- $200,000 ADU can add $250,000-$350,000 to home value
- Immediate equity gain upon completion
- Continues appreciating with LA real estate market (historically 4-6% annually)
30-Year Investment Outlook
Assumptions:
- $200,000 construction cost
- $2,500/mo starting rent
- 3% annual rent increase
- 5% property value appreciation
|
Year |
Monthly Rent |
Annual Income |
Cumulative Income |
ADU Value |
|---|---|---|---|---|
|
1 |
$2,500 |
$30,000 |
$30,000 |
$210,000 |
|
5 |
$2,898 |
$34,776 |
$159,274 |
$255,256 |
|
10 |
$3,361 |
$40,332 |
$344,594 |
$325,779 |
|
15 |
$3,901 |
$46,812 |
$572,753 |
$415,786 |
|
20 |
$4,527 |
$54,324 |
$856,839 |
$530,660 |
|
30 |
$6,067 |
$72,804 |
$1,571,622 |
$864,388 |
Total 30-Year Return: $1,571,622 in rental income + $664,388 in appreciation = $2,236,010
ROI over 30 years: 1,118% (before expenses and taxes)
Short-Term Rental Income Potential
Airbnb/VRBO Rates (Where Legal)
Note: LA has strict short-term rental regulations. You must live on-property and register with the city.
|
ADU Size |
Nightly Rate |
Monthly Income (75% occupancy) |
Premium vs Long-Term |
|---|---|---|---|
|
Studio ADU |
$125 – $175 |
$2,813 – $3,938 |
+40-60% |
|
1 Bedroom ADU |
$150 – $225 |
$3,375 – $5,063 |
+45-65% |
|
2 Bedroom ADU |
$200 – $300 |
$4,500 – $6,750 |
+50-70% |
Additional Short-Term Rental Costs:
- Furnishing: $10,000-$25,000 initial investment
- Cleaning: $75-$125 per turnover
- Platform fees: 3-15% of booking
- TOT Tax: 14% in Los Angeles
- Higher utilities and maintenance
- Significantly more time managing bookings
Maximizing Your ADU Rental Income
Design Choices That Increase Rent
- Include In-Unit Laundry: Adds $100-$200/mo, costs ~$2,500 to install
- Create Outdoor Space: Small patio adds $100-$250/mo
- Install Central AC: Worth $100-$150/mo in rent premium
- Upgrade Kitchen: Modern appliances and finishes add $150-$300/mo
- Add Parking: Can add $150-$300/mo especially on Westside
- Smart Home Features: Thermostat, locks, lighting add $50-$100/mo appeal
- Sound Insulation: Quality tenants will pay more for quiet
- Natural Light: Large windows, skylights increase desirability
Rental Strategy Optimization
- Furnished vs Unfurnished: Furnished can add 20-30% rent but limits tenant pool
- Utilities Included: Simplifies marketing but reduces net income
- Pet-Friendly: Expands tenant pool, charge $50-$100/mo pet rent
- Month-to-Month: Higher rent but more turnover
- Longer Leases: 18-24 months reduces vacancy risk
Tax Considerations for ADU Rental Income
Tax Benefits
- Depreciation: Deduct 1/27.5th of ADU value annually (~$7,272/year for $200k ADU)
- Operating Expenses: Deduct maintenance, insurance, utilities, management fees
- Mortgage Interest: Fully deductible on rental property
- Property Tax: Deductible portion for ADU
- Repairs: Immediate deduction for repairs (vs capital improvements)
Tax Impact Example
Annual Rental Income: $36,000
Deductions:
- Depreciation: -$7,272
- Operating Expenses: -$8,980
- Mortgage Interest: -$11,000
- Taxable Income: $8,748
Even though you collected $36,000 in rent and had $10,340 in cash flow, you only pay tax on $8,748!
Compare ADU Income to Other Investments
|
Investment Type |
Initial Investment |
Annual Return |
ROI % |
Risk Level |
|---|---|---|---|---|
|
ADU Rental (LA) |
$200,000 |
$27,000 |
13.5% |
Low-Medium |
|
S&P 500 Index |
$200,000 |
$20,000 |
10% |
Medium |
|
Out-of-State Rental |
$200,000 |
$16,000 |
8% |
Medium-High |
|
CD / High-Yield Savings |
$200,000 |
$10,000 |
5% |
Very Low |
|
Corporate Bonds |
$200,000 |
$12,000 |
6% |
Low-Medium |
ADU Advantages:
- Higher returns than most traditional investments
- Tangible asset you control
- Located on property you already own and live on
- Builds equity while generating income
- Tax advantages through depreciation
- Hedge against inflation (rents increase with inflation)
Use Our Tools to Calculate Your Potential
Step 1: Check ADU Eligibility
First, verify your property can accommodate an ADU using our ADU Eligibility Check tool.
Step 2: Estimate Construction Costs
Get a detailed cost estimate for your specific ADU project with our ADU Cost Calculator.
Step 3: Calculate Your ROI
Using the neighborhood rental rates from this guide and your construction estimate:
- Identify your neighborhood’s rental range
- Adjust for your ADU’s specific features
- Subtract 20-30% for expenses and vacancy
- Divide net annual income by total construction cost
- Result is your expected ROI percentage
Real-World ADU Income Examples
Case Study 1: Mid-City 1-Bedroom Detached ADU
- Size: 750 sq ft
- Construction Cost: $185,000
- Monthly Rent: $2,600
- Annual Gross: $31,200
- Annual Net (after expenses): $23,400
- ROI: 12.6%
- Property Value Increase: +$220,000
Case Study 2: Venice Garage Conversion
- Size: 600 sq ft
- Construction Cost: $145,000
- Monthly Rent: $2,800
- Annual Gross: $33,600
- Annual Net (after expenses): $25,200
- ROI: 17.4%
- Bonus: Reclaimed driveway parking for main house
Case Study 3: Valley 2-Bedroom New Construction
- Size: 1,100 sq ft
- Construction Cost: $265,000
- Monthly Rent: $3,100
- Annual Gross: $37,200
- Annual Net (after expenses): $27,900
- ROI: 10.5%
- Family Use: Now housing aging parents (priceless value)
Common Questions About ADU Rental Income
Can I Airbnb my ADU in Los Angeles?
Only if you live on the property and register with the city. Short-term rentals under 30 days require Home-Sharing registration. Many homeowners do 30+ day “mid-term rentals” to traveling professionals instead.
Do I need to report ADU rental income?
Yes, all rental income must be reported to the IRS, but you can deduct many expenses including depreciation, reducing your tax burden significantly.
Will building an ADU increase my property taxes?
Yes, but typically only by the construction cost. In California, under Prop 13, your property tax increase is based on the ADU’s assessed value, not the rental income it generates.
What if I use the ADU for family instead of renting?
You still gain significant value through: avoided rent family would pay elsewhere, property value increase, future rental potential, and multi-generational living benefits.
Ready to Build Your Income-Generating ADU?
With average returns of 12-15% annually and the potential to add $250,000+ to your property value, an ADU is one of the smartest investments you can make in Los Angeles real estate.
As experienced ADU contractors and code compliance specialists in Los Angeles, we can help you:
- Maximize your rental income potential through smart design
- Navigate permitting and compliance requirements
- Build a high-quality ADU that attracts premium tenants
- Resolve any existing code violations before starting your ADU
- Complete your project on time and on budget
Start planning your ADU investment today with our ADU Cost Calculator and Eligibility Check.
