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ADU construction ROI calculator
Project the ROI on building an Accessory Dwelling Unit — total construction cost, financing impact, rental income, and payback period.
Payback period (yrs)
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- Total ADU cost$218,000
- Monthly cash flow-$156
- Annual return on investment-0.9%
ADU economics — the math after the cool factor
ADUs (granny flats, casitas, in-law suites) are heavily marketed as easy income. The math is more nuanced. Construction cost has doubled since 2019, rent ceilings are local, and the financing payment frequently consumes most or all of the rental income.
The build-cost tiers
- Garage conversion ($150-250/sqft): existing structure, minimal new utilities — cheapest
- Stick-built detached ($300-450/sqft): typical detached ADU
- Pre-fab / modular ($250-400/sqft): faster, comparable cost
- Manufactured / shipping container ($150-300/sqft): cheapest but limited markets accept
Where the rental math works
Cash-flow positive ADUs typically:
- Built for $300/sqft or less
- Rent for $2,000+/month (high-rent metros)
- Use cash or HELOC (avoids construction loan rate premium)
Where it doesn't:
- $450+/sqft California garage conversions renting for $2,500 (negative cash flow)
- Permit-heavy jurisdictions ($25k+ in fees alone)
The other ROI
ADUs add 25-35% to property value at sale — independent of rental cash flow. Owners holding 7+ years often justify the build on the value bump alone, with rental income as a secondary benefit.
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