Lakewood, Cerritos, and Long Beach Are Ready for an ADU Boom

Lakewood, Cerritos, and Long Beach, CA, have been experiencing growing interest in accessory dwelling units (ADUs) as homeowners and investors look for new revenue through flexible housing solutions. This trend presents investors with an opportunity for supplemental income.

Today, we’re going to look at three ways to prepare for the ADU boom in Lakewood, Cerritos, and Long Beach, CA.

Rental Income

For those who currently rent out single-family homes, the addition of an ADU can provide the owners with a new source of income by introducing a second rent tied to the same parcel. Additionally, ADUs give homeowners the opportunity to dip their toes into being a landlord without purchasing a new property. This kind of diversification can be relevant for owners looking for consistent performance over time. This is because smaller units remain in demand even while the broader rental market changes.

ADUs are generally priced below the main residence, which is reflected in the size of the unit as well as the oftentimes simplified layout. However, they remain competitive when compared to apartments of similar size and layout. ADUs can sometimes attract long-term tenants who are focused on affordability and location rather than size and square footage. Although based on the size, location, and amenities provided to the tenants renting the ADU, the rent can be adjusted accordingly. This can lower overall turnover rates and increase the consistency of occupancy, which in the long run can improve your property’s financial stability.

Regulatory and Legal Compliance

Although an ADU is smaller than the primary home in a property, they are still recognized as legal residences; therefore, they fall under standard housing regulations. This can vary from city to city, meaning it's important to know your local laws and regulations. Alternatively, you can invest in a property management company and use their resources instead. Some examples include the size of an ADU, while in these three cities, a detached ADU can be up to 1,200 square feet in size; attached ADUs are different. Lakewood and Cerritos, CA allow for up to 1,000 square feet or up to 50% of the primary residence’s floor area, whichever is less, whereas Long Beach, CA can be up to 1,200 square feet as well.

Another example is owner occupancy requirements. In Lakewood, CA, under current ordinances for ADUs permitted on the first of January 2025, the property owner generally must live on the property, whether in the main home or the ADU. Although if the owner does not live on the property, both the main home and the ADU need to be rented to the same tenant. In contrast to Cerritos and Long Beach, CA, where there are no longer owner occupancy requirements.

Managing an ADU

Much like any other rental, maintenance is key to longevity. Although an ADU is smaller than the primary residence, it needs to be treated and maintained similarly to a single-family home. For owners who live in the primary residence, this is incredibly convenient as the proximity to the ADU means you can inspect and respond to maintenance requests much more quickly. More frequent inspections mean you can find issues while they’re still minor, and repair them before they become significantly more expensive.

Ensure to plan around the lifespan of the home systems in the ADU, such as plumbing, electric, HVAC, and even the roofing. These items have a finite lifespan, and it's important to plan for replacements or repairs in advance in order to prevent unexpected expenses. Deferred maintenance is a surefire way to negatively affect your bottom line. For example, a minor water leak around the kitchen sink can lead to water damage and, in severe cases, premature rotting of walls and flooring.

The new interest in ADUs offers an opportunity for extra income, as well as introducing homeowners to the real estate market. If you need help marketing your ADU or if you need help managing your Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online.