This is an illustrative estimate only — not a financial projection, appraisal, or guarantee. Leave financing at $0 for an all-cash view, or enter a loan amount, rate, and term to see your levered return and estimated monthly cash flow. It doesn't account for property-tax changes, income taxes, closing costs, or appreciation, and the amortized payment shown is a simplification — compare real loan options in our HELOC vs. construction loan guide. Your own rent and expense assumptions may not reflect your actual market — see our ADU rental income guide for how to think about setting them.
How to read these numbers
Annual Net Income (also called Net Operating Income, or NOI) is your expected rent, minus a vacancy allowance and your ongoing expenses, over a full year. It's the actual cash the unit is expected to generate before financing costs.
Cash-on-Cash Return divides that net income by your total build cost, expressed as a percentage. This calculator shows the unlevered version — what your return looks like if you paid for the ADU entirely in cash. If you're financing part or all of the build, your actual cash-on-cash return will be different once loan payments are factored in, since you'd be comparing income against your actual cash invested (often much less than the full build cost) rather than the full build cost itself.
Simple Payback is how many years of net income it would take to recover your build cost — again, without accounting for financing, appreciation, or taxes. It's a rough sanity check, not a precise investment timeline.
What this calculator doesn't account for
- Financing costs. If you take out a loan to fund construction, interest payments reduce your actual cash flow — this tool assumes an all-cash purchase.
- Property tax changes. New construction can trigger a reassessment of the added value under California's Prop 13 rules, which would increase your property tax bill — this isn't factored in here.
- Income taxes. Rental income is generally taxable, and depreciation can offset some of that — neither is reflected in this simple calculation.
- Appreciation. This tool only measures rental cash flow, not any change in your property's resale value — see our property value guide for that separate question.
Use this to sanity-check assumptions, not to make a final decision
This calculator is most useful for comparing scenarios against each other — what happens to your return if rent is $200 lower than expected, or if the build costs $30,000 more than planned. For a real financial picture specific to your property, a lender and a tax professional can factor in financing and taxes properly.
Frequently asked questions
Keeping the calculation unlevered (cash-funded) makes the math transparent and avoids assuming a specific loan structure that may not match yours. If you're financing your ADU, see our HELOC vs. construction loan guide to understand how that would change your actual cash flow.
There's no universal benchmark — it depends on your market, alternative uses for the capital, and your own goals. This calculator is meant to help you compare scenarios for your specific property rather than measure against a fixed target.
Local rental listings for comparable units in your specific neighborhood are the most reliable source — see our ADU rental income guide for what actually drives achievable rent.
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