Estimate Your ADU Rental ROI
How the Calculator Works
Each city pre-fills with two numbers no generic calculator has: the local ADU build-cost range and the local 1-bedroom market rent, both from our city dataset. The build cost pre-fill uses the midpoint of your city's range, adjusted by ADU type (garage conversions and prefab units use their own per-city cost data). Both fields stay editable — if you have a contractor bid or a rent comp, use it.
The loan payment assumes a 20-year amortization at your chosen rate, which approximates the repayment period of a HELOC or home equity loan — the most common ADU financing. Cash flow is rent minus the loan payment; it does not deduct vacancy, maintenance, insurance, or property tax increases, so treat positive cash flow as a best case and budget 10-20% of rent for operating costs.
Interpreting the Results
| Metric | What It Tells You |
|---|---|
| Monthly loan payment | Principal + interest on the financed portion. Interest-only draw periods will be lower for the first 5-10 years. |
| Monthly cash flow | Rent minus loan payment. Negative cash flow means the rent does not cover the financing — common in high-cost, low-rent markets. |
| Annual yield on cash invested | Cash flow as a return on your down payment. Shows n/a at 100% financing (no cash invested). |
| Simple payback | Years of gross rent to recoup the full build cost, ignoring financing. Useful for comparing cities; most US markets fall between 8 and 15 years. |
What the Calculator Leaves Out
- Vacancy (budget ~5%) and maintenance/repairs (~5-10% of rent)
- Property tax reassessment on the new unit
- Property value appreciation — ADUs typically add 20-35% to home value, which this cash-flow math ignores
- Short-term rental income, which can be higher but is restricted in many cities
Finance Your ADU Project
Most ADU projects are funded through HELOCs, construction loans, or cash-out refinancing. Compare rates from top lenders.
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