What a backyard rental actually returns.

It depends almost entirely on your ZIP code and the size of the unit. A one-bedroom detached ADU commonly rents for somewhere between about $1,600 a month in inland markets and $3,500 or more in coastal and Bay Area neighbourhoods. Rather than quote a state-wide average, the property check reads the HUD Small Area Fair Market Rent for your specific ZIP and bedroom count, blended with Zillow’s observed rent index for the same ZIP.

Two public datasets. HUD Small Area Fair Market Rents give a bedroom-specific 40th-percentile gross rent for your ZIP. Zillow’s Observed Rent Index gives a typical asking rent for the same ZIP across all home sizes. Because the Zillow figure is not bedroom-specific, it is weighted in gradually by unit size — zero weight for a studio, rising to half for a four-bedroom — so a small unit is never inflated by an all-sizes market average. HUD always carries at least half the weight.

Simple payback is the all-in project cost divided by annual net operating income. For a typical detached unit that usually lands somewhere around 9 to 12 years, though it swings widely with local rent. The estimate here uses your unit’s fixed price plus the site-work estimate for that model, and subtracts vacancy, operating costs, and property tax before dividing — so the payback shown is longer, and more realistic, than a gross-rent calculation.

Yes, and it is frequently left out of ADU return estimates. California reassesses new construction: your existing home keeps its Proposition 13 basis, but the ADU adds assessed value taxed at roughly 1.1% of its cost. On a $278,000 project that is about $3,000 a year — meaningful against rental income. This tool subtracts it before reporting net operating income, yield, or payback.

The model assumes a 5% vacancy allowance plus operating costs in dollars rather than as a share of rent — landlord insurance, a maintenance reserve scaled to floor area, and turnover, which together run about $2,000 to $2,800 a year on a new unit. Insurance and maintenance track the unit, not the rent, so a percentage of gross would flatter strong rent markets and understate weak ones. It assumes you self-manage: no management fee, and no landscaping, since the yard is already being maintained. Add roughly 8% of gross if you hire a property manager.

They answer different questions. An ADU converts unused land into monthly income while you keep the property, and the rent frequently covers most or all of the financing payment. A refinance gives you cash but no new income and reprices your existing mortgage. Which is right depends on whether you want liquidity now or an income stream and added value over time.

Often it comes close, and sometimes it exceeds it — but not always, and the honest answer depends on your rate, term, and how much you finance. Financing the full project on a 20-year home-equity product produces a higher payment than a 30-year term. Run the financing tool alongside this one to compare the rent figure against a real payment rather than assuming they offset.

No. They are ZIP-level market data, not an appraisal or a rent guarantee for your specific unit. Actual rent depends on finish level, exact location within the ZIP, parking, privacy, and the market when you list. Treat the figure as a well-sourced expectation for the area, and verify against comparable listings before committing.