Blog Post

ADU Rental Income: Plan Right to Maximize Your Asset

Dustin Edwards • November 20, 2020

The Right Configuration and Planning Can Help You Develop a Valuable Asset

ADU Rental Income
ADUs (Accessory Dwelling Units) have continued to gain support at the state level as well as through local city building codes. Most major cities in Southern California have guidelines in place to support you developing an ADU as part of your single family home or even your duplex, triplex or 4 unit.

The building code provides information needed to build and be in compliance with local and state laws. To be a successful investor you will need to know what yield you can get on each unit that you are adding. We invite you to consider key characteristics from the configuration of your ADU to evaluating competitive apartments for lease to give you an idea on the rental amount you could earn (of course you could ask us too).

Configuration of Your ADU

The configuration of your ADU will have a large impact on the future rent-ability as well as the yield you can expect. Keep in mind that one of the attractive aspects, for many renters, is that an ADU or even Jr. ADU (more on this below) is that these units aren’t like large traditional apartment complexes. Keeping inline with your neighborhood appeal as well as the architecture of the main house is critical to not only pass through the permitting process but also to attract the best possible renters.

What Size and Configuration Should you Develop for your ADU?
Building an ADU in Long Beach or Lakewood as part of your single family residential property is a great way to capitalize on the updates to the building code as well as the demand for affordable rentals in great neighborhoods.

With sizes of ADUs being allowed to 800 sq ft in some cities this gives you the option to create an ADU that is a large 1 bedroom or even a 2 bedroom property. This square footage also provides you the opportunity to provide popular features such as inside laundry. When you are evaluating the option to build an ADU keep in mind that the square footage as well as the configuration (i.e. studio, 1 bedroom, or 2 bedroom) will impact the rent you can receive. Take time to consider what will fit best on your lot and what will help you to maximize the return on your investment.

JR ADU
An update for the building code for 2020 includes the ability to add a Jr. ADU. This means that along with adding an ADU, you could effectively add 2 units to your single family residence. The Jr. ADU does have a few unique requirements to consider. While there are more consider the following:
  • 500 sq ft max
  • Must be within a proposed or existing single family dwelling structure
  • Must meet efficiency kitchen guidelines
One of the first key elements to consider is that of the size. The size of 500 sq ft max means the layout will most certainly be a studio unit. Studios continue to be a popular option in Long Beach and even parts of Lakewood as the rental amount can be affordable for a wider range of renters.

Rental Impact of Your Configuration Selection
Whether you decide to complete only an ADU or an ADU + Jr. ADU you will have to identify the configuration of your decision when you work with your architect in order to get it approved through the planning process. Prior to meeting with an architect we would encourage you to evaluate the nearby rental market (of course you can call us) to see what comparable rentals are going for. While comparing other ADU units is a challenge a great way to compare is evaluating apartments that are currently listed for rent.

With new developments in Downtown Long Beach it offers a wealth of data to analyze. Consider a few of the following studio examples.
  • 603 sq ft with a range of rent of $2,213-$2,832
    • This means a lease price per sq ft: $3.66 - $4.69
  • 525 sq ft with a rent of $2,203
    • This means a lease price per sq ft: $4.19
What do these prices mean for your rental? As a rough rule of thumb you could take the lease price per sq ft and multiply it by the size you are developing. For example if you are developing a 700 sq ft unit you could get $2,562/mo at $3.66 a sq ft. This is certainly not an absolute rule and there are many factors that come in to play to achieve certain lease per sq ft prices (i.e. amenities, location, appliances included, pet policy, etc.) but it does help you to gauge if it would be a good idea for you to build out your property.

When it comes to deciding what the size and configuration of your ADU + Jr. ADU should be there are many items to consider. With our knowledge of the rental market we can help you to evaluate your opportunity. Call us today at (562) 888-0247 and let us know you’d just like to discuss building an ADU and/or a Jr. ADU and we will be happy to help.


Share this post

By Dustin Edwards January 10, 2025
Having clear communication with your tenant is essential for maintaining a healthy landlord-tenant relationship. By being transparent in all relevant interactions, landlords can prevent misunderstandings while resolving repairs and disputes efficiently while improving tenant satisfaction. Having good communication with your tenant is beneficial for landlords too. Effective communication also protects your investment property. Remember that while your tenant is living in the property, landlords need to take care of the repairs. Below are the three best things to do during tenant communications. Prompt Responses Addressing tenant concerns quickly is essential for building trust and maintaining a positive relationship. Tenants feel valued when landlords respond quickly, knowing that their needs are being prioritized. Building this trust not only enhances your tenant’s satisfaction it lowers the possibility of conflicts or misunderstandings to arise. This ultimately creates a healthy and successful rental experience for you and your tenant. Some of the most common inquiries will oftentimes include repair requests, among others. As an example; if your tenant reports a leak under their faucet and the repair is delayed, this can be damaging to your landlord-tenant relationship, as well as your property. If left ignored, that leak can result in hundreds of dollars in water damage and a vacancy . Which can further affect our bottom line negatively. For landlords with multiple properties, this can become difficult to keep track of. A property manager can help with scheduling repairs and communicating with your tenant on your behalf. Document Everything Keeping a detailed record of all interactions with your tenant is an important element when managing a property. There are many choices for documentation including email, text, or written notices. Although many property management companies and landlords have opted to use apps or dedicated tenant portals to log communications. A great example, for instance, a tenant may claim they’d reported a repair issue that was never addressed, if everything is to be documented, both you and the tenant would have a copy of the request. Maintaining transparency with tenants. Having thorough documentation ensures agreements and requests between all parties are clearly tracked. Documenting communications with your tenant provides landlords with a foundation for addressing misunderstandings, or disputes if and when they arise. Provide Regular Updates Regular updates show tenants that their landlord is organized and has an attentive approach to managing their property. Giving tenants ample time for maintenance, inspections or policy changes is a simple way to build trust with your tenants while showing your professionalism. Giving tenants advanced notices reassures them that you’re aware of how changes can affect them and you understand that time might be needed in order to adjust. Surprises are best kept for birthday parties. Proactively notifying tenants of changes helps clear the communication channels and minimizes disruptions which helps tenants feel valued and satisfied. These small yet consistent efforts can contribute to a positive tenant stay, which can encourage lease renewals and long-term tenancy. Additionally, having a good relationship with your tenants can give you a great reputation which can provide you with leads when looking to fill a vacancy . It cannot be understated the importance of communication for a healthy landlord-tenant relationship. Even if your tenant may not agree with some of the decisions a landlord needs to make, by giving your tenants ample time to process the change tenants generally are more accepting of said change. If you’re having trouble communicating with your tenants or if you need help managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
By Dustin Edwards January 2, 2025
Keeping tenants safe, translates to happy and long-term tenants. Read to discover 5 Inexpensive ways to keep your tenants safe.
By Dustin Edwards December 26, 2024
Owning a rental property near the beach offers an undeniable charm, with amazing ocean views, refreshing sea breezes, and year-round access to beach activities. Unfortunately, the winter season presents many unique challenges for landlords. Which if left ignored can result in higher turnover rates and additional maintenance to your rental property. Below we’ve compiled a short list of five unique challenges for beach properties in winter and ways to help deal with them. Coastal Humidity Coastal humidity is challenging year-round, as it may cause issues like mold, mildew, and accelerated wear from the salty air. Unchecked moisture can lead to accelerated corrosion on surfaces and even structural damage if left unchecked. For this, it's good practice to have regular inspections and preventive maintenance to protect your investment. Although, during the winter season, the coastal humidity can feel worse for your tenants. To help with this, consider installing a dehumidifier and ensure the property is properly ventilated. This is also a great time to seal any leaks or drafts to prevent excess moisture into the rental property. Many tenants resolve this issue by using the HVAC system more frequently which can add unnecessary wear and tear to the system. Coastal HVAC systems oftentimes have a shorter lifespan when compared to their inland counterparts. The humid and salty air can cause corrosion that reduces their efficiency which puts more strain on the HVAC system. During the winter season, excessive heater use may reveal wear and tear caused by salt exposure. For this, regular servicing is even more important in preventing breakdowns, maintaining reliable performance, and providing tenant satisfaction . Holiday Tourism During the holidays, Long Beach , much like many coastal cities, receives an influx of tourism. While necessary for many small businesses, holiday tourism can be a hindrance to some tenants, depending on the location of the rental. With tourists, comes increased noise levels from cars and people. To help alleviate this, you should consider installing proper noise insulation and soundproofing. This can be a significant investment especially for soundproof insulation as this needs to be done with exposed wooden studs. Alternatively, noise-reducing windows and paint can be used to mitigate some of the noise from holiday tourism. Additionally, parking may become a nightmare especially when parking spaces are limited. This can leave long-term tenants frustrated. While adding dedicated parking to your rental may be impossible for some. For rental with dedicated parking, ensure that your tenant’s space is protected from people who steal parking spots from local residents. Outdoor Maintenance Outdoor spaces are important for beach properties, although they demand extra care during winter. This is due to how marine layers can damage beach rental properties . Sand and debris can accumulate and make patios, walkways, and entryways less inviting. While heavy rainfall may damage furniture, railings, or fences. Regular cleaning and maintenance keep these areas safe and appealing for tenants. The sand and salt can cause premature corrosion on items left outdoors. Pests Winter can drive wildlife like seagulls, rodents, or even raccoons to seek shelter in warmer areas such as your rental property. During the winter, pests can create unexpected challenges for beach properties. Seagulls can be incredibly noisy, while rodents seek a warm and dry shelter. Additionally, the added humidity can weaken wooden structures inviting ants, termites, and roaches. To help prevent pest problems during the winter season, landlords should focus on maintaining proper cleanliness and sealing any exposed entry points. Consider hiring a professional to inspect and identify potential gaps, cracks, and openings where pests may gain entry to the rental property. Also, be sure to keep trash bins closed and far enough away from the rental to keep hungry pests away from the home. Increased Utility Usage The winter months bring with an increased use of heaters and other appliances. This can strain older systems causing them to work less efficiently which can elevate the rental’s energy bill and lower your tenant’s satisfaction. This can be tricky to resolve as other than preventative maintenance when systems begin to fail a replacement is required. However, when the system inevitably fails, you should not only replace the unit or system, you should upgrade the system to an energy-efficient system. This can not only ensure reliable performance but it can also lower the overall utility costs for you and your tenant. Proactive improvements help to maintain tenant comfort while also keeping your property competitive in the rental market. Winter presents unique challenges for beach properties, though with proper care, landlords can maintain their investment while keeping tenants happy. Which can ultimately improve your bottom line. If you need to address unique winter challenges or if you need help managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
Show More
Share by: