ADU Rent Estimate: What a Backyard Unit Can Earn

An ADU — an accessory dwelling unit, or backyard rental — turns unused lot space into monthly income. But it only pays off when the rent it earns outruns what it costs to build. The whole decision comes down to three numbers: cost to build, rent per month, and how long until one pays back the other.

Pick the unit size first

Cost and rent both scale with size, but not evenly. A studio or junior ADU — often a garage conversion — is the cheapest way in. A detached one-bedroom is the most common build and usually offers the best rent-per-dollar. A two-bedroom earns the most rent, but the build cost and lot requirements climb fastest.

• Studio / JADU: Lowest cost, lowest rent — garage conversions land here
• 1-bedroom: Most common build, best rent-per-dollar for most lots
• 2-bedroom: Top rent, but cost and lot needs climb

Rent depends on where you are

ADU rent tracks local apartment rents and usually runs roughly 50–70% of a main-house rent. The same one-bedroom that rents for $1,400 in one metro clears $2,600 in another, so a national average is nearly useless here. Drop in your ZIP and the estimate tailors to your area.

Break-even is the whole game

Divide the build cost by the monthly rent and you get a gross break-even — the months it takes for the rent to cover what you spent. A $180,000 unit renting for $2,400 breaks even in about 75 months, just over six years. After that, the rent is income against an asset you own.

And it builds equity, too

Beyond rent, a permitted ADU adds value the appraiser can credit. If you’d finance the build against your home, weigh the rent against the cost of that borrowed equity — the unit should add more than it costs to fund.