Essentials for Backyard Landlords: The Must Know Before Renting an ADU

One of the most common reasons people want to develop an ADU on their property is to earn passive rental profits, and we’re seeing why. Being a landlord is a fantastic way to supplement your earnings while still maintaining a balanced retirement fund.

Here in ADU Resource Center, we will assist you in determining and designing just what your rental unit would need to provide you with the highest possible return on investment.

The advantage of having your own ADU is that you can establish any rule you want. Much of this can be written down in a lease so that all parties are aware of the rules and any conflicts can be avoided. You might consider including:

  1. When does the tenant have to pay rent? 
  2. Is this a long-term contract (more than one year) or a month-to-month lease?
  3. Do you allow pets? Are there any limits on size, form, or quantity?
  4. Is a security deposit as well as pet rent required?
  5. Is it permissible to smoke? 
  6. Is there a charge for utilities?
  7. Is parking included in the price?
  8. Who will have access to the yard or other outdoor areas?

You will have complete freedom to set any rules for your ADU as long as you don’t break any laws, you can even consider what would be on people’s checklists in your neighborhood beforehand. For example, living near a college campus would undoubtedly draw students looking for short-term accommodation. If you live in a densely populated area with little parking, you’ll get a flood of rental applications if you have an extra parking space.

You will find a lot of lease agreement models online, just make sure you read them thoroughly and update them if appropriate to ensure they cover anything you need. Or better yet, call us to write the contract and gather the signatures for you if you’d just take the easy path.

Try to avoid terms like “ideal for a student” or “looking for a pair” when listing the ADU because they may be considered discriminatory. Keep your listing short and sweet, focusing only on the benefits of your ADU. “The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.”

Being a landlord entails more than simply sitting back and collecting rent. Keep in mind that you will also have a few obligations as a landlord.

We have the tools, design staff, referrals, and knowledge at the ADU Resource Center to get you on the right track to finishing your ADU. The first step in being a better landlord is to define your expectations and what you want to get out of your rental. Begin with a free phone consultation! Contact Us (310) 974-3174.

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