There are many types of ADU and there’s no doubt that with today’s rental rates, proprietors who build ADUs in their homes have the possibility to generate substantial revenue, which in many cases can even pay for their entire ADU project within a few years. But as more Californian homeowners turn to ADUs to earn that monthly passive income and possibly increase the value of their property, what many homeowners are wondering is:
“How much money can I make from my ADU?” and “How much does an ADU add to the value of my property?”
The answers to both questions depend on the type and size of the ADU you built or want to build. There are four main types of ADUs: Detached ADUs, Attached ADUs, Internal ADUs, and Garage Conversions. And they’re all very different in terms of design, construction, cost, and how much value they will add to your property.
If you want to know which types of ADUs are most convenient, here’s a list of the most profitable ADUs to the least profitable ones:
Most Profitable: Detached ADU
With a separate unit, you’re adding additional square meters to the house, which appraisers can use to determine how much your property is worth. For example, a detached ADU can add 1,000 sqft of new living space to the property. With an average cost per sqft of approximately $470 in Los Angeles, your new 1,000 sqft ADU could increase the value of your property by an average of $470,000.
Profitable: Attached ADU
An attached ADU is the second most valuable type of ADU because it’s connected to your existing home, so you have less privacy than with a detached unit, but appraisers will still use a cost per sqft analysis when determining the value of the new construction, and the $470 sqft average for Los Angeles would still be applicable.
Fairly Profitable: Garage Conversion ADU
Although this type of ADU will usually increase your property value substantially, the increase will be less than both detached and attached units because while converting your garage, you lose the use of your garage for its intended purpose, which can decrease your property value slightly. But it’s okay because they’re the least expensive one to build, and you can turn your garage into a guest home and gain rental income.
Less Profitable: Internal ADUs
Internal ADUs are the least profitable of all types of ADUs because they don’t add new livable square footage to your property. In the construction process, you lose a part of the valuable property for many people, as is the attic or the basement. Additionally, with an internal ADU, you have even less privacy than all the other types described above.
Choosing the right ADU for your needs can be a complicated task, but we are here to guide for your ADU floor Plans in Los Angeles. Let us help you determine what is best for you, your property, and your budget. Call us at (310) 974-3174 or schedule a free consultation.