How to Rent Out Your ADU for Income (and Why It Pays Off)

Turn your backyard into a real income stream — or even a mini real estate portfolio.

🧭 Your Backyard, Reimagined as Income

Homeowners have been building wealth through real estate for decades. The difference today? You can start in your own backyard.

One of the top reasons people contact us is simple: they want to install an ADU for rental income. With prefab, that rental stream can start in half the time of a traditional build — meaning returns sooner, fewer headaches, and faster breakeven (Prefab vs. Traditional ADUs →).

In California, where property prices are sky-high, buying a second property is out of reach for many. But thanks to state incentives, you can now create a legal, rentable unit without spending millions. With the right unit, financing, and team, you can start generating income in months, not years.

💸 How Much Can You Rent an ADU For in California?

Region Studio 1 Bedroom 2 Bedroom
Los Angeles $1,800–$2,200 $2,300–$2,800 $3,200–$4,000+
San Jose $1,600+ $2,000–$3,000 $3,200–$3,900
San Diego $1,700–$2,100 $2,200–$2,700 $3,000–$3,800
Sacramento $1,400–$1,700 $1,800–$2,200 $2,400–$3,000

Tip: Well-designed, permitted ADUs with quality finishes rent faster, stay occupied longer, and command premium rates.

📈 What Rental ROI Looks Like

Example:

  • Build Cost (All-In): $360,000
  • Monthly Rent (2BR in San Jose): $3,500
  • Annual Gross Income: $42,000
  • Gross Rental Yield: 11.6%
  • Breakeven: ~9–12 years

That’s before factoring in appreciation, tax deductions, or refinancing after lease-up.

Compare that to:

  • Buying another property (huge down payment + bidding wars)
  • REIT returns (5–7%, zero control)
  • Sitting on equity (inflation erosion)

Want to see your numbers? Click below to get started with our ADU rental Calculator

💰 Financing: Build It with the Bank’s Money

Most rental-focused clients use:

  • Cash-out refinance
  • HELOC (Home Equity Line of Credit)
  • Renovation/construction loan
  • Refinance again after lease-up

With rental income offsetting — or exceeding — payments, you’re essentially creating a cash-flowing property without buying new land.

🧩 Interwoven Home: Multiple Income Streams on One Lot

Why stop at one unit? Our Interwoven Home approach lets you:

  • Add a 2BR ADU for long-term rent
  • Include a 350 sq ft POD for Airbnb, office, or studio rent
  • Keep your main home (or rent it later)

One lot. Three structures. Multiple income streams.

🏘️ SB 9: The Lot Split That Doubles Your Income

Under SB 9 lot split rules, many California homeowners can:

  • Split their lot into two parcels
  • Build a home + ADU on each
  • Rent both, sell one, or create multi-generational wealth

Example:
A Los Angeles homeowner split a 7,200 sq ft lot, built a 2BR ADU on each side, and now collects rent from both while living in one. One lot became two — income doubled.

🛏️ Why LiveLarge Units Rent (and Stay Rented)

  • Steel frame: no termites, no warping
  • Triple-paned windows: whisper-quiet interiors
  • Thoughtful layouts: privacy + comfort for tenants
  • Luxury interiors: premium rents + faster leasing
  • Fully permitted: easier insurance, refinance, and long-term value

These aren’t sheds — they’re true, appreciating homes.

🕒 Short-Term vs Long-Term Rentals

Most go long-term for stability.

Short-term (Airbnb, travel nurses) can work in the right zoning — especially with POD units (often permit-free).

We’ll guide you based on your goals, location, and management style.

🏡 Even If You Don’t Rent, You Win

A LiveLarge ADU adds permitted square footage that:

  • Boosts resale value
  • Increases buyer appeal
  • Provides flexible living space
  • Creates a future rental option

⚙️ Why LiveLarge Is the Smartest Path to ROI

  • Faster install = faster income
  • Transparent pricing = no surprises
  • Prefab = fewer delays, less stress
  • Interwoven Home = scalable income
  • SB 9 guidance = bigger long-term potential

✅ Ready to Start?

📍 [Check Your Backyard] — Free instant eligibility check
💰 [Book a Rental ROI Call] — Map your numbers, goals, and options
🏡 [Tour Our Units] — San Jose & Los Angeles showrooms

This version:

  • Gets to ROI faster
  • Surfaces SB 9 earlier with a bolder subhead
  • Links naturally to other cornerstone topics
  • Reinforces the rental calculator twice
  • Stacks CTAs after a clear “next step” moment

Discover More

Why LiveLarge ADUs Use Triple-Paned Windows (And Why You Should Care)

When LiveLarge Makes Sense — and When It Doesn’t (Traditional vs Prefab ADU Guide)

A Modern Guide to Accessory Dwelling Units.