With land in Los Angeles becoming more and more valuable, it’s no wonder that people are looking to increase usable space on their property and generate rental income. An accessory dwelling unit, or ADU, is an effective way to add more square footage to your home.
Here, let’s talk more about what an ADU is, how to build an ADU in Los Angeles, and share some estimates for how much you can expect to rent your ADU out for in LA.
What is an Accessory Dwelling Unit (ADU)?
An accessory dwelling unit (ADU) is an additional place to live on your existing property. They take advantage of space you might not be using, such as a garage or large backyard. Some people also call these extra spaces granny flats, in-law units, backyard cottages, and the like.
No matter what you call it, an ADU is a great way to increase your home’s square footage and, in some cases, generate extra income with short- or long-term rentals.
Considerations When Building an ADU in Los Angeles
Due to local and state ordinances, planning for ADU construction in Los Angeles takes a bit of preparation, but it’s not impossible. It will generate long-term benefits for years to come. In fact, you may even qualify for an ADU funding law depending on where you live because ADUs offer more affordable housing in an extremely busy market.
How Much Does an ADU Cost to Build?
The first consideration when building an ADU in Los Angeles is how much it will cost. The answer to this question depends on your existing infrastructure and how big of an ADU you are building.
In general, converting an existing space (such as a garage or guest house) may cost anywhere between $70,000 and $100,000. Again, this depends on zoning, the materials used, timelines, and more.
If you want to build a new structure, estimate that your project may cost between $300-$400 per square foot.
Can I Build an ADU on my Property?
Another great question homeowners in LA have, “can I build an ADU on my property?” and the answer is, it depends! Luckily, many local ordinances are encouraging the development of accessory dwelling units because California is facing a severe housing crisis and ADUs offer valuable housing that meets more families’ needs.
Here are some points to note when building an ADU in Los Angeles, according to the California Department of Housing and Community Development:
- ADUs are not allowed jurisdiction-wide, and a local government may designate areas where residential ADUs are permitted
- A local government can apply design and development standards on ADUs
- ADUs may exceed general plan and zoning densities
- ADUs can be built in historic districts
- ADUs can be constructed on a lot that has multiple detached single-family homes (one ADU per lot)
- There is no minimum lot size requirement when building an ADU
- Minimum and maximum sizes can be established by a local government when building an ADU
- Local governments may impose height limits on ADUs in LA
- You will likely need a Los Angeles building permit to build an ADU on your home.
As the housing market continues to change, so do the rules regarding ADUs in Los Angeles. Before embarking on this project, contact your local government or an ADU builder in Los Angeles that understands the area, possible restrictions, and timeline.
How Much Rental Income Will I Get From an ADU in Los Angeles?
Many homeowners who choose to build an ADU do so to generate rental income. How much rental income you can generate from an ADU will depend on a variety of factors. Let’s look at rental incomes from ADUs based on size.
Less Than 400sqft
An ADU that is less than 400 square feet is likely a converted space, such as a garage, and is usually only a studio or 1-bedroom. According to MLS Listings, you may be able to rent a studio space out for $1,200-$2,500/month, depending on what part of LA you live in.
400-600sqft
An ADU between 400-600 square feet could be a converted garage, an attached ADU, or even a small separate ADU. These living spaces may rent for $1,400 – $4,000, depending on the area.
600-800sqft
2-bedroom ADUs in Los Angeles that are over 600 square feet can rent for up to $4,500 in some areas such as Santa Monica, West Hollywood, Hollywood Hills, and Studio City. As you can see, if you have the space to build a larger ADU, you may generate more rental income.
More Than 800 sqft
3-bedroom ADUs or larger can generate between $2,400-$5,000/month in rental income. These larger ADUs may require additional permits, so check with your local government to understand current restrictions.
Accessory dwelling units in LA are growing in popularity because of the extreme demand for housing and the favorable laws that intend to streamline ADU approval. ADUs are a valuable housing option for Angelinos and a great option to generate extra income with the property you already own. If you’re ready to start your own ADU project, request a free consultation with Bela Development.
