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Renting an ADU

ADU rental income: how to estimate yours honestly

By the HyreADU research desk. Last checked .

The short answer

ADU rental income is the rent a tenant pays minus vacancy, the utilities you cover, repairs, insurance and taxes.

Start with HUD’s Fair Market Rent for your area and bedroom count, then check local listings for similar units.

Not every ADU earns rent: in a 2021 survey of California owners, about half were generating rental income and 16 percent housed a relative for free.

Step 1: find a rent benchmark

HUD publishes Fair Market Rents each year for every metro area and county, by bedroom count. The FY2026 figures took effect October 1, 2025.

FMR is a 40th-percentile gross rent that includes utilities, set for the voucher program, so it is a benchmark, not an asking rent for an ADU.

Look up yours and type it into the ADU rent estimator.

Then search current listings for units of a similar size, bedroom count and quality nearby. A detached unit with its own yard usually rents differently from a unit over a garage.

Step 2: subtract the costs

  • Vacancy between tenants.
  • Utilities you pay, if the ADU shares meters with the house.
  • Repairs and replacement of appliances and finishes.
  • Insurance changes for a rented unit.
  • Property tax on the new construction where your state reassesses it; the ADU property tax calculator runs it on your rate.
  • Management fees if you hire help.

Step 3: check the rules on renting

California lets cities require ADU rentals of 30 days or longer (Gov. Code § 66315), and ADUs approved under § 66323 must be rented for more than 30 days. Some cities apply rent control or tenant protections to ADUs. Our rent control research covers the rules we have checked.

How owners actually use ADUs

The 2021 UC Berkeley Center for Community Innovation survey of California ADU owners found about 51 percent of units were generating rental income, 16 percent housed a relative or friend at no cost, and 8 percent were used for short-term rental.

If the unit will house family, rental income is the wrong measure of its value. See who lives in ADUs.

A mistake to avoid

The mistake to avoid is using a national “average ADU rent” from a marketing page. Rents vary block by block. Use your own area’s FMR and real local listings, and model a low, middle and high case in the ADU ROI calculator.

What to do next: check your lot with the ADU feasibility checker, read the questions to ask an ADU builder, then tell us about your project. Matching is not live yet, so we reply with information, not a quote.

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Questions

How much rent can I charge for my ADU?

What the local market pays for a similar unit, subject to any local rent rules. We publish no rent figure.

Does ADU rent count as income for a loan?

Lenders have their own rules; that page is held for review. See our financing research.

Is ADU rental income taxable?

We give no tax advice. Ask a tax professional.

Can I charge for utilities separately?

Separate meters make it simpler. Shared-meter billing has local rules.

Sources

HyreADU is a publisher. It does not design, permit or build ADUs, has no partner builders, and gives no legal, tax, lending or engineering advice.

Rules vary by state and city; California rules are labeled as such. Spotted an error? Tell us through our corrections page. Licensed professionals can also contribute as named sources.