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.


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By Dustin Edwards November 18, 2024
Be aware of these 3 common issues when the rainy season arrives at your rental property.
Cold weather can come fast and strong so it's best to ensure your property is ready for this climate
By Dustin Edwards November 12, 2024
It's important to prepare your rental properties for the colder weather. Although we don’t need to prepare for snow and freezing temperatures, we do need to prepare for the cold and rain. By ensuring your rental is cozy inside and prepared for the fall season , you can not only reduce energy costs for your tenant but also maintain your rental property value. Today, we’ll go over three signs your property is ready for this upcoming cold weather.  Sign #1 Proper Weatherproofing During the colder seasons, it's much easier for a tenant to notice any cold spots in your rental. Well-insulated doors and windows can not only help maintain the warm temperature but also prevent it from lowering. It can also prevent cold spots and drafts, which can help with tenant satisfaction . Doors and windows should be properly sealed and insulated to prevent drafts and maintain proper temperatures. A visual inspection of the weatherstripping around doors and windows to ensure they’re intact is a great place to start. If damaged, consider replacing them, as trying to seal gaps can be tricky and rarely lasts. Other seals should also be checked, as well as any areas that need to be caulked in order to keep cold air out. Insulation during the summer helps keep the cool air in, and during the winter, insulation in the halls and attics helps retain desired heat. Hot air rises, and if there isn't adequate insulation in the ceiling, heat will continually be lost. Luckily, adding insulation to an attic is not uncommon and typically only requires a day or two for installation. Sign #2 Energy Efficiency Measures During the winter, it's not just the cold you need to keep in mind. As days are much shorter, there is less sunlight to keep the rental warm and more hours of darkness. For this reason, it's a good idea to keep energy efficiency in mind when preparing for the cold weather. Energy-efficient lighting or smart lighting helps reduce overall costs since your tenant will likely use electricity to keep warm. Ensure your outdoor lighting is rated for external use, as this can provide crucial illumination during longer nights. Draft guards on doors and windows help reduce the load on your rental’s HVAC system which can significantly improve its lifespan. This is also a great time to replace filters and clean the ductwork in your rental to improve energy efficiency. Additionally, consider installing an insulative film on older windows, which helps retain heat and keep rooms warmer without the need for extra heating. If your rental has a programmable thermostat, ensure it’s in working order, as this can help tenants manage an energy-efficient heating schedule more easily. Sign #3 Property Exterior Southern California is a great place to settle down, and while we don't need to worry about snowfall or deep freezes, ensuring the exterior of your rental property is ready for the cold weather is important. With our cold season mainly bringing with it rain, inspect your rental property’s rain gutter system . Remove debris from drains and check for leaks or signs of wear and tear. Walkways should be clear of debris and well-lit. This may require you to prune and trim trees and bushes that may leave behind leaves. When combined with rainfall, a single wet leaf can cause someone to slip and hurt themselves. Consider adding non-slip mats or tape to areas where people may have tripped in the past. Much like during the hotter weather, it's important for your rental to be ready for fall and winter. By keeping your property ready for any weather Southern California has to offer, you ensure your rental property and tenants will provide steady rental income every month. If you need help preparing your rental for the cold weather 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 November 4, 2024
Owning a rental property in a beach city like Long Beach, CA , offers a number of advantages, like great weather and a strong real estate market. However, the cold ocean breezes can pose some challenges for landlords and tenants, making it convenient for property managers . Although the weather is generally great, these ocean breezes can sometimes make properties drafty and uncomfortable during the fall and winter seasons. Today we’ll go over four measures that can improve tenant comfort and protect your investment from the cold ocean breezes. Weatherproofing Againsts Drafts Drafts are caused by gaps between doors and windows which can make a rental feel colder than it is. This leads to unnecessary energy use and tenant discomfort. Sealing these gaps is not difficult and quite doable for a landlord who doesn’t mind getting their hands dirty. Replacing worn weatherstripping and adding fresh caulking to seal minor gaps blocks air from permeating the property. For additional protection from drafts, you can provide your tenant with inexpensive door sweeps. Improve Heating Efficiency Having efficient heating is crucial to countering the cooler ocean breezes while keeping costs low. Schedule regular maintenance for your HVAC system , such as replacing filters, cleaning vents, and cleaning the compressor to keep it running smoothly. This not only provides more efficient heating, it also extends the life of your HVAC system. Installing a smart thermostat is another way for tenants to adjust heating schedules efficiently. Protect Outdoor Spaces Outdoor areas such as patios, balconies, and even porches can oftentimes be exposed to the coastal breezes. This can be an issue in the long run, especially for rentals next to the beach , as the wind can carry sand and salt, which can accelerate the deterioration of metals, wood, and paint. This can be mitigated by adding windbreaks to the property, such as lattice panels or outdoor curtains, to create a more comfortable and functional outdoor space. Exterior finishes will require more frequent maintenance. This includes resealing wood and metal surfaces. As well as repainting is important to protect against wear from salt, sand, and moisture. Wind Mitigating Landscaping Much like with the curtains and lattice previously talked about, the landscaping can also be used as a windbreak. For example, planting wind-resistant shrubs or trees alongside exposed areas creates a natural barrier. This helps reduce the impact of the gusts of wind hitting the property. Many native plants thrive in coastal climates while also requiring minimal maintenance. While expensive, the results can greatly improve your rental’s longevity and curb appeal. Alternatively, you can strategically place planters to provide protection. Durable Furniture Furniture and fixtures exposed to the cold coastal breezes need to be able to withstand that wear and tear. Choose resilient materials such as treated wood, powder-coated metals, and outdoor-rated plastics. These are less prone to being damaged by the salt or wind. Furniture that is lightweight should be secured or anchored in place to prevent it from being blown away. By investing in durable furnishing, you can provide tenants with a comfortable and functional outdoor space for years to come. Protecting your beach city property from the cold ocean breeze doesn't necessarily require extensive renovations or investments. Try to focus on any relevant feedback from your tenant, this can help you pinpoint what part of your rental needs attention. If you need additional help protecting your rental property from the cold ocean breezes 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 .
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