Accessory Dwelling Unit

California ADU ROI Calculator

Work out whether a garage conversion or detached ADU carries itself, including the California supplemental tax assessment and what each financing route really costs.

Garage conversions run lower; detached new builds higher

The rest is financed

HELOCs price above first mortgages

Income & Costs

Applied to the build cost only — Prop 13 reassesses the new construction, not your whole home

California appraisers often value an ADU below what it cost to build

Your Current Mortgage

Needed to price a cash-out refinance honestly

If this is well below today's rates, a cash-out refinance costs far more than it looks

Results

Net Monthly Cash Flow

$210.18

Rent, less debt service and every added cost

At $2,400 rent this ADU clears $210 a month after debt service, the supplemental tax, insurance and maintenance. A cash-out refinance would cost $1,522 a month MORE than a HELOC here, because it re-prices your 3.25% balance at today's rate as well.

Cash-on-Cash Return

5%

Break-Even

19 yrs 10 mo

Where the money goes each month

Debt Service$1,735.65
Supplemental Property Tax$229.17
Added Insurance$75
Maintenance & Vacancy$150
Total Added Costs$454.17

What each route adds to your monthly payment

HELOC / Second$1,735.65
Cash-Out Refinance$3,257.68
Refinance Costs More By$1,522.03

The build

Amount Financed$200,000
Cash Invested$50,000
Estimated Value Added$200,000

A cash-out refinance replaces your whole first mortgage, so the figure above is the total change to your payment, not the cost of the ADU money alone. Value added is an estimate you set, not an appraisal — California appraisers frequently value an ADU below its build cost. Permit and impact fees, utility connections, and construction-period interest are not modelled.

Email Me These Results

Other calculators

ConventionalFHAVARefinanceAffordabilityDTIExtra PaymentRent vs BuyBlended RateDSCRCost of WaitingEquity AccessAsset Depletion
FAQ

ADU ROI Calculator Questions

Straight answers from a California mortgage broker.

No. Under Proposition 13 the county assesses the new construction only and adds it to your existing assessment; your home keeps its base year value. That is why this calculator applies the tax rate to the build cost rather than to the property. The supplemental bill usually arrives a few months after final inspection.
It depends almost entirely on your current rate. A HELOC borrows against your equity and leaves the first mortgage alone. A cash-out refinance replaces the first mortgage, so if you are holding a rate well below today's you re-price that whole balance too, which can cost more per month than the ADU loan itself. This calculator shows both as the change to your total payment so they can be compared.
Less than it costs to build, more often than not. Appraisers need comparable sales, and in many California neighbourhoods ADU comps are still thin. Treat the value figure here as your own estimate and ask a local appraiser or agent before relying on it. Rental income is usually the stronger part of the case.
Look at studio and one-bedroom rents in your immediate area rather than at your own home's value. A detached new build generally commands more than a garage conversion of the same size. Be realistic about vacancy: this calculator has a maintenance and vacancy line for that reason.

Want the Real Numbers?

Calculators estimate. A two-minute pre-qualification gets you rates from 100+ lenders for your exact situation.

Get Pre-Qualified(714) 399-6361

This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Rates, terms, and availability of programs are subject to change without notice.

Reviewed by Joann Ton, Loan Officer (NMLS# 1461031) | Last updated: September 2026