Will the lot pencil?
Adjust your own illustrative cost, rent, vacancy, operating-expense, and appreciation assumptions. Results are planning scenarios, not market forecasts or promised returns.
Cash-on-cash return
9.7%
Net operating income (annual)
$25,679
Payback period
10.3yrs
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.
- $392,265
- Payback period
- Years to recover the build cost from NOI alone, ignoring appreciation.
- 10.3 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 |
| $265K· current | 9.7% | $256,785 |
| $310K | 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?
A healthy return cannot be set from a regional rule of thumb. Model current rent evidence, vacancy, operating expenses, financing, taxes, maintenance and total project cost, then test downside scenarios with qualified financial and tax advisers.Where should I get the rent number?
Use several current, genuinely comparable rentals and document differences in size, condition, parking, utilities, access and lease term. A local property professional can help interpret the evidence; no single listing or adjustment guarantees achievable rent.Why is vacancy set to 5% by default?
Vacancy varies by location, unit, price, lease structure and market conditions. Test more than one vacancy assumption and separately verify whether the intended rental use is permitted at the property.What does the 15% operating expense include?
Operating expenses may include incremental taxes, insurance, utilities, repairs, reserves, turnover and management. Build the model from current quotes and professional guidance rather than a universal percentage.Is the 4% appreciation realistic for LA?
Future appreciation is uncertain and should not be treated as guaranteed. Test flat, lower and higher scenarios, and separate a project’s housing value from speculative resale assumptions.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.