Main Content

Here’s What to Know to Unlock the Value in an ADU


Inman Logo



New Inman contributor Lindsey Harn writes that accessory dwelling units offer a wide variety of benefits for all kinds of renters, from college students to elderly family members

With the rising rates of real estate across the country, more homeowners are relying on ADUs to bring in extra income. Accessory dwelling units have added significant value for many homes, and we are continuing to see more pop up along the central coast.

Under the new law, AB 1033, property owners in participating cities will be able to construct an ADU on their land and sell it separately, following the same rules that apply to condos. ADUs are beneficial to both homeowners and renters as they help renters save money, and they help homeowners bring in more income.

Rental income

ADUs are often popular with renters as they tend to be more affordable and safe to live in. ADUs offer a degree of separation and privacy, as they are typically smaller, self-contained units on the same property as the main residence.

They’re also popular with current homeowners as they can increase their property value when they plan on selling their house. Many homebuyers look for properties with ADUs as they provide an opportunity for extra income. With the development of homeownership not being financially viable for some, the extra income from ADUs can help with mortgage payments and home upkeep.


ADUs can also be an ideal location to house older relatives, as they provide a separate living space with close proximity in case of emergencies. The new state ADU law helps add affordable rental housing and improved safety for tenants who might have formerly lived in substandard rental conversions.

Some jurisdictions offer incentives for homeowners to build ADUs, such as fee reductions, expedited permitting processes, or financial assistance. These incentives can encourage the development of ADUs and promote affordable housing goals.

In college towns, people sometimes use garages as living spaces. These units in the past have caused lots of worry and fear for renters, but with reliable ADUs, safety is a key priority.

Better locations

One of the top items on a renter’s list is the location in which they are going to be living. ADUs are often located in established neighborhoods, providing renters with the opportunity to live in desirable areas that provide them with different amenities than they would have with a regular stand-alone rental property.

A key highlight many people do not usually mention when discussing ADUs is their sustainability. Due to their smaller size, they require less energy to power, which makes them more sustainable than other larger rental properties. Water and electricity bills are on the rise and the fact that renters could save hundreds on utilities if they decide to rent an ADU is a major selling point.

Cost savings

Housing costs on the central coast are high, and inventory is low, making it relatively difficult for people to find rentals or homes to purchase. Due to regional housing needs assessments, cities are heavily relying on ADUs to pass.

According to an SLO Tribune article, “The city’s annual goal is 32 ADUs per year, he said, and the city received 33 applications.” These ADUs will help develop and diversify the rental market.

With the rental market becoming more expensive in many markets, ADUs can offer affordable housing for students. Homeowners in neighborhoods near colleges and universities could benefit from adding an ADU to their property as many students look for housing that is close to campus but still in an established neighborhood.

ADUs often have distinctive architectural designs and layouts, offering renters a unique and charming living experience. This can appeal to those looking for something different from standard apartment living.


ADUs can cater to changing demographics, such as an increasing number of single-person households or multi-generational living arrangements. This can broaden the market for potential tenants. At the same time, Local zoning laws and regulations may limit the ability to construct ADUs or impose restrictions on their use.

Compliance with these regulations can be time-consuming and costly for landlords, but that should not dissuade people from exploring their options. Additional rental income and added home value should more than make up for costs and extra time incurred.

Lindsey Harn’s results-driven approach, unmatched work ethic, integrity, and honesty have earned her top-producer status, as well as the loyalty and respect of her clients and colleagues.  Connect with Lindsey on Instagram and Linkedin.

Article originally published on Inman.