Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Cash-on-cash return
15.0%
Monthly cash flow
$814
Simple payback period
6.7
Annual cash flow
$9,763
Monthly loan payment
$836
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How to use this
- 1Enter total construction cost ($).
- 2Enter amount financed (0 = all cash) ($).
- 3Enter loan rate (if financed) (%).
- 4Enter loan term (years).
- 5Enter projected monthly rent ($).
- 6Enter monthly adu-specific expenses (utilities, insurance, maintenance) ($).
- 7Read your cash-on-cash return on the right — it updates as you type.
- 8Hit Share to keep the scenario or send it to someone.
About this calculator
Adding an accessory dwelling unit — a backyard cottage, garage conversion, or basement unit — has become one of the higher-return additions available to homeowners in states that have loosened zoning, because you're adding a full rental income stream to a lot you already own without buying additional land. This calculator takes your total construction cost (financed or cash), projected monthly rent, and operating expenses specific to the ADU (utilities you cover, added insurance, maintenance), and computes monthly cash flow, cash-on-cash return, and simple payback period. It also estimates the value added to the property, since ADUs typically add less to appraised value than their construction cost in many markets (comps for ADU-equipped homes still lag), which matters if your exit strategy is selling rather than holding for rental income. The real underwriting question for most homeowners isn't whether an ADU cash-flows — it usually does, since there's no land cost — but whether the construction cost per square foot for a small, detached structure (often $250-450/sqft due to fixed costs like utility hookups spread over less area) pencils against the achievable rent in your specific market.
Worked example
Using the values the calculator loads with:
Inputs
- Total construction cost: 165000 $
- Amount financed (0 = all cash): 100000 $
- Loan rate (if financed): 8 %
- Loan term: 20 years
- Projected monthly rent: 1900 $
- Monthly ADU-specific expenses (utilities, insurance, maintenance): 250 $
Results
- Cash-on-cash return: 15.0%
- Monthly cash flow: $814
- Simple payback period: 6.7
- Annual cash flow: $9,763
- Monthly loan payment: $836
What each field means
Inputs
- Total construction cost ($)
- The total construction cost used in the calculation, measured in $. Starts at 165000 $ so you have a working example on load.
- Amount financed (0 = all cash) ($)
- The amount financed (0 = all cash) used in the calculation, measured in $. Starts at 100000 $ so you have a working example on load.
- Loan rate (if financed) (%)
- The loan rate (if financed) used in the calculation, measured in %. Starts at 8 % so you have a working example on load. Accepted range: 0–15 %.
- Loan term (years)
- The loan term used in the calculation, measured in years. Starts at 20 years so you have a working example on load. Accepted range: 1–30 years.
- Projected monthly rent ($)
- The projected monthly rent used in the calculation, measured in $. Starts at 1900 $ so you have a working example on load.
- Monthly ADU-specific expenses (utilities, insurance, maintenance) ($)
- The monthly adu-specific expenses (utilities, insurance, maintenance) used in the calculation, measured in $. Starts at 250 $ so you have a working example on load.
Results
- Cash-on-cash return
- Returned as a percentage and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly cash flow
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Simple payback period
- Returned as a decimal number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual cash flow
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Monthly loan payment
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why do ADUs cost so much per square foot?
Fixed costs — new utility connections, permitting, a full kitchen and bathroom, foundation, and a separate roof and HVAC system — get spread over a small footprint (400-800 sqft is typical), so per-square-foot cost runs much higher than a home addition of comparable total cost. Detached units cost more than garage conversions or basement units because you're building all-new structure rather than converting existing space.
Does an ADU actually pay off in home value if I sell?
Appraisers in many markets still undervalue ADUs relative to construction cost because comparable sales data is limited, so plan on capturing return primarily through rental income rather than resale value unless local comps clearly support a higher valuation. This gap is narrowing in states like California where ADU sales comps have built up over the past several years.
What financing options exist for ADU construction?
Home equity loans/HELOCs, cash-out refinances, renovation loans (like Fannie Mae's HomeStyle), and a growing number of ADU-specific construction-to-permanent loan products that underwrite partly on projected rental income. Rates and terms vary widely, so shop at least three lenders since this is a newer loan category with inconsistent pricing.
Are there other benefits this ROI calculator doesn't capture?
Yes — multigenerational housing flexibility, aging-in-place options for family, and owner-occupancy house-hacking (living in the ADU and renting the main house, or vice versa) all have value beyond the pure cash-on-cash number, and many owners build for those reasons even when the strict rental math is a secondary consideration.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). ADU Build ROI Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/adu-build-roi
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/adu-build-roi" target="_blank" rel="noopener">ADU Build ROI Calculator — RevenueLab</a> (2026).</p>
Source: [ADU Build ROI Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/adu-build-roi) (2026).