ADU feasibility calculator: will your backyard unit pencil?

Before you call an architect, you can answer the only question that matters first: does the unit make money? ADU feasibility comes down to five numbers — buildable size, construction cost, rent, added home value, and return. Here's how each one works, and a worked example you can copy.

What "feasibility" actually means for an ADU

An accessory dwelling unit (ADU) is a second, smaller home on a lot that already has a house — a converted garage, a basement unit, or a detached cottage. Feasibility is simply whether the unit you're allowed to build is worth what it costs to build. Two sites with identical houses can have completely different answers depending on lot size, local rules, and rents.

You need two things to find out: how big a unit the site allows, and what that unit does financially. Everything below is in that order.

Step 1 — Buildable size

Your maximum ADU size is the smaller of two limits:

• What the lot has room for — lot area, minus your existing home's footprint, minus required setbacks from each property line, within the allowed lot coverage.
• What the code caps — most jurisdictions set a hard ADU ceiling, frequently 800–1,200 sq ft, plus a height limit (often one to two stories).

Whichever is smaller is your real buildable size. Don't forget that parking, side-yard access, and utility routing can quietly shrink the usable footprint.

Step 2 — Construction cost

Cost scales with size and finish level. A detached ADU commonly runs $200–$400 per square foot all-in. Garage conversions sit lower; ground-up detached units with new utility hookups sit higher. Multiply your buildable size by a realistic cost-per-foot for your market:

Step 3 — Income and added value

An ADU pays you back two ways:

• Rent — monthly market rent × 12 = annual income.
• Added home value — a permitted, rentable unit raises the property's appraised and resale value, often by a meaningful fraction of its build cost or more in high-rent markets.

Step 4 — Return (ROI)

The fastest screen is gross rental yield: annual rent ÷ construction cost. It ignores financing and operating costs, but it tells you in one number whether a unit is even in the conversation. Many ADUs that pencil land in the 7–15% gross-yield range. Then layer in the value bump to see the full picture.

Here the unit roughly pays for itself in added value alone, then throws off $24k a year. That's a deal worth taking to the next step. Swap in your lot size, local cost-per-foot, and rent to see your version.

Three mistakes that sink ADU math

1. Ignoring setbacks and coverage. The code maximum is rarely the buildable maximum — the lot usually decides first.
2. Forgetting site work. Sewer, water, and electrical hookups can add tens of thousands before a single wall goes up.
3. Using list rent, not market rent. Comparable rents for a small unit in your specific area drive the whole return.

Frequently asked questions