Creative ways to make money off an ADU?

Question

Let's say I have a property with an ADU in the back. What are some ways to generate income from this?

1) Rent as a separate unit (obviously the best return)
2) Add to the main unit as "extra storage or workshop" space. Could add 200-400/month?
3) Rent as storage unit to separate tenant

Dan H. · Answer

Condoize the ADU.   Sophisticated value add if allowed.

In San Diego city and unincorporated San Diego this is allowed by right. Our prices are crazy but a detached ADU that looks like its own property but is condoized can go for nearly the same if it was a detached home (average cost about $1m. So buy house wit( detached ADU for ~$1.2m, condoize the ADU, sell the ADU for nearly $1m. End up with a SFH at a very attractive price for my market.

Good luck

Diana Khan · Answer

@Asish Balu, one thing I’d check first is what the ADU is actually approved to be used for. Just because the space could work as a separate rental does not always mean it can legally be rented that way.

If a separate rental is allowed, I’d also look at the lease setup, utilities, insurance, and access before deciding what makes the most sense. As a Maryland real estate attorney, broker, and investor, I think the best option is the one that works both financially and from a property-use standpoint.

Sarah Jones · Answer

Thanks for laying those out—solid starting point. One angle to weigh: converting it to a workshop/storage might limit future flexibility if you later want to go back to a full unit. Have you checked your local zoning on separating utilities or egress for Option 1 versus the others?

Creative ways to make money off an ADU?

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