Free Tool
ADU Rent vs. Sell Calculator
Should you build an ADU and rent it, or sell your home and invest the proceeds? This calculator runs a 10-year comparison so you can see which option comes out ahead for your specific situation.
Adjustable assumptions. See the numbers change in real time.
What the Calculator Assumes
This is a simplified model to help you think through the decision. Here is exactly what it calculates and what it leaves out.
Included
- ✓ 6% agent commission on home sale
- ✓ 1.5x ADU value multiplier on property
- ✓ 10-year property appreciation
- ✓ 10-year gross rental income
- ✓ 15% vacancy + maintenance deduction
- ✓ 7% annualized investment return (sell scenario)
Not Included
- - Financing costs for ADU build
- - Income tax on rental income
- - Depreciation deductions
- - Capital gains tax on sale
- - Property tax increase from ADU
- - Property management fees
Rent vs. Sell Questions Answered
Is it better to build an ADU and rent it, or sell my house?
In most California markets with strong appreciation and high rents, building an ADU and holding the property wins over a 10-year horizon. The combination of rental income, property value growth, and the ADU value premium typically outperforms selling and investing proceeds at a 7% stock market return. The calculation flips if rent is low, appreciation is sluggish, or the ADU cost is very high.
How much does an ADU increase home value?
A well-built ADU typically adds 1.5–2x its construction cost to property value in high-demand California markets. An ADU generating $2,500/month could add $375,000–$500,000 to your home's appraised value, using typical rent-multiplier methodology. The actual increase depends heavily on your specific market and buyer demand for income properties.
What is a realistic appreciation rate for California real estate?
California residential real estate has historically appreciated at 3–7% annually over long periods, though with significant variation by market. Coastal metros like San Francisco, Los Angeles, and San Diego have seen higher long-term appreciation than inland markets. A conservative planning assumption of 3–4% is reasonable; 5–6% is more optimistic but historically supportable in strong markets.
Does renting an ADU affect my ability to sell later?
No — you can sell your home with an existing tenant (subject to California tenant protections) or wait for the lease to end. An income-producing ADU can actually make your home more attractive to certain buyers, particularly investors and multi-generational families. An ADU is a permanent improvement that stays with the property.
What costs does this calculator not include?
This is a simplified model for illustrative purposes. It does not include mortgage financing costs for the ADU build, property management fees, income taxes on rental income, ongoing maintenance beyond the 15% vacancy/maintenance deduction, or capital gains tax on a future sale. For a full financial plan, consult a financial advisor.
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