The Truth About Granny Flats (ADUs) and Value

Accessory Dwelling Units (ADUs), casitas, or "granny flats" are exploding in popularity across Riverside and San Diego counties thanks to relaxed state laws. But are they a good financial investment?

Income Potential vs. Contributory Value

Appraisers look at ADUs in two ways:

• Contributory Value: How much extra will a standard buyer pay for the home because of the ADU? Usually, this is less than the cost to build it. If you spend $150k building a unit, don't expect the total home value to jump $150k instantly.
• Income Approach: If the unit is rented, it generates cash flow. For investment properties, this is huge. For owner-occupied homes, it's a "nice to have."

Best Use Case

Build an ADU for multi-generational living (aging parents or adult children) or for long-term rental income. Do not build one strictly for a short-term "flip" profit, as the construction costs are currently very high relative to the immediate resale value increase.