Will the lot pencil?
Adjust your assumptions. LA ADUs typically deliver between $250K–$450K and land in the 10–16% cash-on-cash range.
Cash-on-cash return
8.3%
Net operating income (annual)
$25,679
Payback period
12.1yrs
10-year cashflow
$256,785
Investment inputs
All-in build cost: design, permits, construction, utilities. LA range: $175K–$450K.
Achievable monthly rent for a long-term tenant. LA 1BR ADU range: $1,800–$3,800.
Assumptions & notes
- Net operating income (annual)
- Effective rent × (1 − opex). Pre-debt, pre-tax cash the ADU produces.
- $25,679 / yr
- 10-year cashflow
- NOI × 10. Excludes rent growth and inflation.
- $256,785
- Estimated property value in 10 yrs
- Project cost compounded at the appreciation rate for 10 years.
- $458,876
- Payback period
- Years to recover the build cost from NOI alone, ignoring appreciation.
- 12.1 yrs
Estimates only. Excludes financing, taxes, and capital expenditures. Not financial advice.
Breakdown
How each input shapes your annual return.
Monthly rent × 12.
Vacancy rate applied to gross rent.
Taxes, insurance, repairs, and management.
What lands in your pocket each year.
Total all-in build cost — denominator for cash-on-cash.
10-yr value gain at your appreciation rate.
Sensitivity
How cash-on-cash and 10-yr cashflow shift as you sweep one variable across LA ranges. Other inputs hold at your current values.
| Input | Cash-on-cash | 10-yr cashflow |
|---|---|---|
| $150K | 17.1% | $256,785 |
| $200K | 12.8% | $256,785 |
| $250K | 10.3% | $256,785 |
| $310K· current | 8.3% | $256,785 |
| $360K | 7.1% | $256,785 |
| $420K | 6.1% | $256,785 |
| $500K | 5.1% | $256,785 |
FAQ
Frequently asked questions
What homeowners ask before underwriting an LA ADU as a long-term rental.
What's a healthy cash-on-cash return for an LA ADU?
5–8% is the LA market band for a permitted ADU rented at market rate. Below 4% usually means the build cost is high for the rent comps in that ZIP. Above 9% typically reflects a garage conversion or a hot rental sub-market like Silver Lake or Mar Vista.Where should I get the rent number?
Pull three comps within a half-mile from Zillow, Apartments.com, and a local property manager — average them, then subtract 5% to be conservative. We can run a rent comp study during feasibility for $0 if you're inside our service area.Why is vacancy set to 5% by default?
LA ADU vacancy averages 4–6% on long-term leases (12+ months). Short-term rental conversions push this much higher (15–25%) and carry regulatory risk under LA's Home-Sharing Ordinance.What does the 15% operating expense include?
Property tax delta, insurance, water/sewer, common-area utilities, repairs, and management. Self-managing landlords sometimes hit 10–12%; full-service property management runs 18–22%.Is the 4% appreciation realistic for LA?
LA County's 25-year compound appreciation is 5.1%. We default to 4% to stay conservative against rate-cycle headwinds. Adjust upward only if you're underwriting a 10-year hold in a Tier-1 ZIP.Does this calculator account for taxes and depreciation?
No — the model is pre-tax cash flow. Depreciation, mortgage interest deduction, and 1031 treatment can meaningfully change after-tax IRR. Run the output past your CPA before making a final decision.