Accessory Dwelling Units (ADUs), also known as backyard homes, granny flats, or in-law units, are transforming the residential landscape of Los Angeles. With rising housing demand, flexible zoning laws, and increasing homeowner interest, ADUs are becoming a mainstream solution for both housing and investment. But where exactly are these units being built in LA, and what kind of financial return can property owners expect?
What Is an ADU?
An Accessory Dwelling Unit is a secondary housing structure located on the same lot as a primary residence. ADUs can be detached, attached, converted from existing space (like a garage), or newly constructed units. In Los Angeles, ADUs are seen as a key tool in addressing the region’s housing shortage.
Where Are ADUs Being Built in Los Angeles?
Since 2017, when California passed legislation easing restrictions on ADU construction, Los Angeles has seen a surge in permits. According to data from the LA Department of Building and Safety, over 25,000 ADU permits have been filed since then.
Top Neighborhoods for ADU Construction
South Los Angeles
With larger lot sizes and relatively lower property prices, South LA is a hotspot for garage conversions and detached ADUs.San Fernando Valley
Neighborhoods like Van Nuys, North Hollywood, and Sherman Oaks lead in ADU permit applications due to suburban layouts and strong rental markets.Northeast LA
Areas like Highland Park and Eagle Rock have seen a spike in ADUs as younger homeowners look for rental income to offset mortgage costs.West Los Angeles
Though land is more expensive, high rental demand makes ADUs financially appealing, particularly in places like Mar Vista and Palms.East LA and Boyle Heights
Predominantly single-family residential zones make these areas suitable for detached and attached ADUs.
Mapping Trends:
While ADUs are being built citywide, they are especially common in lower-density neighborhoods with sufficient backyard space and easy access to public transit or major freeways.
How Much Do ADUs Increase Property Value in Los Angeles?
The value that an ADU adds to a property varies depending on several factors: location, build quality, size, and whether it's permitted. However, most real estate professionals agree that ADUs can significantly boost resale value and income potential.
Estimated Value Increase
Average Increase in Property Value:
ADUs can raise property value by 20% to 30%, depending on local market conditions and how the unit is used (rental vs. personal).Rental Income Potential:
A one-bedroom ADU in LA can rent for $1,500 to $2,500 per month, depending on the neighborhood. In high-demand areas, even studio-sized ADUs command premium rents.Return on Investment (ROI):
The cost of building an ADU ranges between $100,000 to $250,000, and many homeowners break even within 8–12 years through rental income alone.
Benefits Beyond Property Value
Multi-Generational Living: ADUs are perfect for extended family or aging parents, allowing privacy and proximity.
Rental Income: ADUs can serve as long-term rentals or short-term vacation rentals (where permitted).
Flexibility: Homeowners can use the space as an office, guest suite, or future retirement option.
Legal Considerations and Zoning
Los Angeles has simplified the process of building ADUs through local ordinances that comply with California state laws:
No minimum lot size requirement.
Reduced parking requirements.
Expedited permit process (typically within 60 days).
Ability to build both an ADU and a Junior ADU (JADU) on the same lot.
Final Thoughts
ADUs are more than just an architectural trend—they are a financially smart, sustainable, and flexible solution to Los Angeles’ housing challenges. Whether you’re a homeowner looking to boost property value or a real estate investor exploring high-ROI opportunities, ADUs are reshaping LA’s housing future one backyard at a time.
