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ADU ROI Calculator
An ADU's return = annual rental income + home value lift − build cost. Cash-on-cash is the rental income divided by cash invested. This calculator sizes both metrics and payback years.
Cash-on-cash ROI
19.9%
Payback years
5
Net annual cash flow
$10,740
15-year total return (cash + value lift)
$227,100
Cash invested
$54,000
How the math works
$180K ADU 70% financed: $54K cash in. $2,000 rent × 94% − $250 opex = $1,630/mo × 12 − $8,820 interest = $10,740 net annual cash. ROI 19.9%. Payback 5 years. Plus $120K value lift = $281K total 15-year return on $54K cash.
Financing leverages ROI dramatically. Cash-only ADU: 6-9% ROI. 70% financed: 15-20%+. Match financing to your risk tolerance.
How to Use
- Enter ADU build cost, expected monthly rent, operating expenses, and home value lift.
- See cash-on-cash ROI, payback years, and total return including value lift.
Frequently Asked Questions
Typical ADU ROI?
8-14% cash-on-cash in strong rental markets. Payback 7-11 years. Additional 5-10% home value lift. Strong urban markets (CA, Seattle, Austin): 12-18% ROI easily.
Does ADU count at resale?
Yes. Conforming ADUs add 25-35% to home value typically. Non-conforming (unpermitted): often viewed as liability by appraisers and limited lift.
Financing impact on ROI?
HELOC or cash-out refi to fund: compound on return. If your home value lifts to cover the HELOC balance, ADU is effectively free-standing. Full cash purchase: lower ROI but cleaner finances.
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