Los Angeles homeowners are turning to Accessory Dwelling Units (ADUs) as a savvy way to leverage their property for additional income. Whether you’re considering short-term or long-term rentals, understanding ADU rents in LA, along with the relevant regulations, is crucial.
But don’t worry if the decision feels overwhelming since this guide provides an overview to help you navigate the process.
Short-Term vs. Long-Term Rentals
ADUs, both custom and prefab, offer flexibility in rental options which makes them an excellent investment.
Short-term rentals can attract tourists or business travelers looking for a homey stay, therefore potentially generating higher income. It is particularly worth noting that short-term rental activity is only allowed through the Home Sharing Ordinance.
Meanwhile, long-term rentals provide steady income and less turnover but may come with additional landlord responsibilities.
Regulations to Consider Before Building an ADU to Rent
Before diving into the rental market, familiarize yourself with local regulations related to ADU rents in LA:
- Zoning Regulations: Verify that your property’s zoning accommodates ADUs. Some LA areas may have specific requirements or disallow ADU construction entirely.
- Permitting and Building Codes: Secure all necessary construction permits for your ADU to avoid penalties. Adherence to local building codes and safety regulations is particularly crucial.
- Size and Design Restrictions: Investigate any limits on the ADU’s size, height, and design because regulations may vary for detached versus attached units.
- Parking Requirements: Check if off-street parking is needed for the ADU, as per local ordinances.
- Owner Occupancy Rules: Some areas mandate that homeowners live on the property for a minimum of six months per year, fostering community ties and regulatory compliance.
- Rental Regulations: Become acquainted with local rental laws, including any applicable rent control measures.
- Historic Preservation Rules: If your property is in a historic district, additional approvals might be necessary. ADU construction allowances can vary by district.
- Fire and Safety Requirements: Ensure compliance with fire safety standards, such as accessible emergency exits and properly installed smoke detectors.
- Homeowners Association (HOA) Rules: While HOAs cannot legally block ADU construction, reviewing your HOA’s regulations beforehand can preempt disputes.
ADU Size and Potential Rental Income
The size of your ADU can significantly impact potential rental income. In fact, here’s a tabular summary to give you an idea:
| ADU Size (sq ft) | Estimated Monthly Rent (USD) |
| 300-400 | $1,000 – $2,000 |
| 450-800 | $2,000 – $3,000 |
| 800+ | $3,700 – $6,000 |
For instance, consider the case of John. He is a homeowner in Echo Park who recently finished constructing a 500 sq ft ADU in his backyard. After weighing his options, he decides on long-term rental to ensure a steady income.
He lists the unit for $2,000 a month, attracting a young professional new to LA. John navigates the permit process smoothly because he consulted GoldenADU to understand city regulations beforehand. As a result, this ADU becomes not just a significant financial asset but also a way to meet the city’s growing demand for housing.
Therefore, ADUs present a lucrative opportunity for LA homeowners to earn extra income through rentals. By understanding the differences between short-term and long-term rentals and adhering to local regulations, you can make the most out of ADU rents in LA.
In conclusion, if you need customized guidance for developing an ADU that you can rent out, don’t hesitate to contact us. Our expertise in guiding our clients toward their ideal ADU project puts us in a particularly excellent position to do the same for you.
Contact us today at 213-693-2405 to get your free ADU consultation!
FAQs
Can I rent out my ADU on Airbnb?
Yes, but ensure you comply with LA’s regulations on short-term rentals.
What’s the average rent for an ADU in LA?
It varies, but ADUs can command significant rents, especially in desirable neighborhoods.
Do I need a permit to rent out my ADU?
Yes, your ADU must meet all local building and safety codes to be rentable.
How can I maximize my ADU’s rental income?
You can maximize your ADU’s rental income by particularly focusing on high-demand areas, quality furnishings for short-term rentals, or adding amenities like parking or private entrances for long-term leases.
Are there tax implications for renting out an ADU?
Yes, rental income is taxable, and specific tax benefits or obligations may apply. Consult with a tax professional for advice.
