7 Rent
AFTER YOUR FINAL INSPECTION, YOUR ADU IS READY FOR MOVE IN! This might be you, a friend, a family member, or a tenant. There are many benefits to sharing your property with a tenant, but renting also comes with many responsibilities – make sure you have a good sense of the laws governing rental agreements and think about the issues that might arise from welcoming a new neighbor into your space.
Timeline
Most ADU projects take 12-18 months to complete, but some extend to 24 months or more.
Key Resources
ADU Guidebook
Every detail you need from start to finish.
ADU Guidebook
Every detail you need from start to finish.
ADU Calculator
Estimate project costs and potential income.
ADU Calculator
Estimate project costs and potential income.
ADU Exercises
Record the details as you go through the process.
ADU Exercises
Record the details as you go through the process.
ADU Stories
Learn from others who have built ADUs.
ADU Stories
Learn from others who have built ADUs.
FAQs
Here are a few of the most frequently asked questions about renting your ADU. See the content below and our ADU Guidebook for more guidance, resources, and tips for all steps of the process.
As soon as the final inspection is complete, your ADU is ready for move-in! Make sure utility services are set up, an address is established, and other preparations are in place. See below for more responsibilities of being a landlord.
Renting an ADU comes with many responsibilities, including understanding local and state housing laws, executing a lease, finding and managing a tenant, and maintaining a rental property. It’s important to understand the laws as they may affect things like future rent increases, changing use over time, evicting tenants, and moving family into the unit.
See our Guidebook for resources on understanding rental laws, tenants’ rights, and more, and our Exercises for help with your lease terms.
No. Generally, J/ADUs are not allowed to be rented for less than 30 days. This discourages the listing of ADUs on popular websites like Airbnb and VRBO and promotes them as a means to increase housing stock for the diverse needs of county residents. Some cities may require you to file a deed restriction agreeing that the unit will not be used for short-term rentals.
STEP-BY-STEP
Renting Your ADU
BEFORE YOU BEGIN:
Confirm the new street address for your ADU with City staff. You’ll need this street address to establish utility services and to set up your lease.
Complete preliminary steps
Prepare to rent your unit by getting insurance, setting up utilities, and developing a plan to handle the finances.
Understand rental laws
You will need to understand all the laws related to being a landlord, especially around discrimination. For an overview of California laws that regulate certain aspects of the rental housing market, review California Tenants: A Guide to Residential Tenants’ and Landlords’ Rights and Responsibilities, published by the California Department of Consumer Affairs. You should also talk to city staff about regulations that might apply.
Helpful Tools
Set the rent
Maximizing the rent is often not the only consideration – setting a fair rent a bit under market rate will help you attract and keep good tenants. Consider pricing your unit so that it is affordable for the local workforce and families who may not be able to afford high rents in the city. A unit is considered affordable if a household is paying less than one-third of their income on their housing costs.
Many homeowners are motivated to rent their ADU affordably to community members because they serve essential roles and often have difficulty finding housing that meets their needs. If you financed your construction with a loan, consider the loan length, interest rate and any reserve funds you have as well.
Write your lease
Make sure your lease (or rental agreement if it is month-to-month) clearly identifies all the expectations for you and your future tenant. See our Exercises for help planning your lease. Some jurisdictions may require landlords to initially offer a one-year lease to tenants, so talk to City staff to confirm if this is a requirement.
You will need a rental application to give to prospective tenants and a lease or rental agreement if it is month-to-month. Samples are available online. Once you select a tenant, you should collect a security deposit and first month’s rent when you sign the lease. Conducting a move-in inspection with your tenant is also a good idea.
Helpful Tools
Find your tenant
Research how to successfully advertise your ADU and select a good tenant. Along with work of mouth or posting your rental online, you can also contact nearby schools, faith communities, or other similar locations to see if any teachers, staff, or community members are looking for housing.
Manage your rental unit
Think about a long-term plan for the care and upkeep of your ADU, how to split shared responsibilities, and how to address any issues that might occur with your tenant.
- Maintenance According to state law, it is your responsibility as a landlord to maintain a “habitable” ADU. Regardless, it is best practice to keep your ADU well-maintained and to keep your tenant happy. Except in the case of an emergency, you will need to give your tenant(s) 24 hours’ notice before you or any maintenance people can enter.
- Rent increases Generally, if your tenant has signed a lease, you cannot increase the rent during the lease term. When the lease expires (or in month-to-month tenancies), you can increase the rent as you see fit. Beginning in January of 2020, the Tenant Protections Act now provides rent cap protections for qualified rental housing in California (see details in California Tenants: A Guide to Residential Tenants’ and Landlords’ Rights and Responsibilities).
- Eviction Hopefully you and your tenant(s) will not have problems, but if problems do arise that cannot be resolved, you will need to consider eviction. It’s recommended that you work with a lawyer if eviction is necessary. State law mandates a judicial eviction process, which is best handled by a lawyer.
- Reporting Rent Some cities may require ADU and JADU property owners to report rent charged. Check with your City to see if there are reporting requirements.
