Considering an Accessory Dwelling Unit (ADU) to boost your property’s value? You’re not alone. Homeowners across California are increasingly turning to ADUs as a strategic way to increase their property’s worth. If you’re wondering whether adding an ADU can truly enhance your property value, or how much value it might add, you’ve hit upon a common inquiry. As experts in ADU and SB9 design and permitting, Yifu Design Studio has the answers you need.
The question of ADUs and property value is multifaceted and dependent on the type and size of the ADU you’re planning. There are four primary ADU types: Detached, Attached, JADU, and Garage Conversion ADUs. However, these types don’t hold equal weight when it comes to increasing property value.
A Detached ADU, also known as a Granny Flat, emerges as the most valuable choice when completed. The rationale is straightforward. Adding a detached ADU means introducing more livable square footage to your property—a crucial factor for appraisers determining your property’s value. Consider this scenario: A brand-new 1,000 sqft granny flat contributes an additional 1,000 sqft of living space to your property. According to Realtor.com, the median cost per sqft in Los Angeles is approximately $719 as of July 2023, building a 1,000 sqft detached ADU could elevate your property value by around $719,000.
At an investment of approximately $300,000, Los Angeles homeowners could witness a remarkable $719,000 increase in property value. This translates to a staggering 200% return on investment (ROI), demonstrating the substantial impact of choosing to construct a beautiful detached ADU on your single-family zoned property.
An Attached ADU, or Granny Flat, ranks as the second most valuable type upon completion. While it offers slightly less privacy due to its connection to your main home, its value increase is comparable. Appraisers continue to apply a cost per square foot analysis to gauge the new construction’s value, with the $719 sqft average for Los Angeles remaining relevant.
The primary reason an attached unit holds slightly less value than a detached one lies in the ADU Ordinance’s influence on allowable square footage. An attached ADU can only augment your home’s size by 50%. For instance, if your existing home is 1,200 sqft, the attached ADU’s maximum size would be 600 sqft. Even so, this would still elevate your property value by $368,400—an impressive increase, albeit below the boost offered by a new detached ADU.
Garage Conversion ADUs present a cost-effective option that substantially enhances property value, though less so than detached and attached units. These ADUs are budget-friendly to build, but the shift from using your garage for its intended purpose can slightly reduce property value. Despite this, the property value increase from the Garage Conversion ADU generally outweighs the decrease, positioning it as the least valuable in resale and property value terms.
However, the primary allure of converting a garage into a Granny Flat lies in rental income. In Los Angeles, a converted garage ADU can yield between $1,500 and $3,000 in monthly gross rental income. This rental income, coupled with the modest investment required for conversion, offers an appealing return on investment.
Choosing the right type of Accessory Dwelling Unit aligns with your lifestyle and budget can be a challenge. Yifu Design Studio is here to guide you through the decision-making process. Regardless of the ADU type you opt for, rest assured that you’re augmenting your property’s value significantly.
Tell us what you’re planning — an ADU, SB9 duplex, multifamily, or commercial build — and we’ll show you what’s possible based on your site, zoning, and goals. This free consultation includes:
We’ve designed and permitted dozens of successful projects across Southern California. Let’s talk.
