ADUs with Chasin RE

I've built, rented, and held accessory dwelling units across Orange County and Napa Valley — as a licensed broker, a lender, and an investor putting my own capital into the ground. Here's the math, and the properties, behind why ADUs are one of the best risk-adjusted investments.

Why do ADUs work?

If you are considering building an ADU for yourself or as an investment I can help. I will share with you three equations that I use as framework before I recommend an ADU to a client or commit my own capital. Here are three separate ways an ADU can create value.

1Cost per unit — SFR + ADU vs. new duplex

Blending a lower per-unit basis by adding onto land you already control.

SFR acquisition$1,000,000

ADU construction$250,000

SFR + ADU total · 2 units$675,000 / unit

New-build duplex, 2 units$750,000 / unit or $1,500,000 PP

Not universal to every market, but it's one of the first checks I run on any investment analysis: can I create a second unit cheaper than I could buy one outright?

2Retail $/sqft vs. cost of construction

The spread between what you build for and what the market pays for finished square footage.

Newport Beach retail price per sqft$1,467 / sqft

Typical ADU construction cost$300 – $500+ / sqft

Potential Equity Created~$1,000 / sqft. 500 sqft ADU at market value = $500,000 in equity creation

An ADU rarely appraises at full retail $/sqft on resale — but in every single project I've built, the finished value has exceeded the construction cost. That spread is the profit margin.

3Cash flow on newly deployed capital

Same $300k, two very different outcomes depending on where it lands.

$300k deployed into a $1M SFR (debt-financed)~$0 / mo cash flow

$300k deployed building an ADU~$3,000 / mo gross rent

Approx. cash-on-cash return10%+

The SFR route isn't a bad outcome — it's a legitimate strategy for high-income earners who want a depreciable asset as a tax shelter and are fine with muted cash flow. The ADU route is the one I don't see matched many other places without taking on more risk.

Reference

California ADU Handbook

Here is a good starting point before we get the scope of your project. The state's official guide to ADU regulations, financing programs, and permitting pathways.

Download the handbook

Let's pencil it out

Have a lot, garage, or backyard in mind?

I'll walk your parcel, present financing options, and go over the numbers with you — no obligation.

Email ChasinRE

ChasinRE · 360 E 1st St #782, Tustin, CA 92780 · CA DRE #01447886 · NMLS #1130391
*Based on the author's personal ADU investments to date; individual results vary by market and project.

Legal Disclosures

Investing with Chasin RE involves a high degree of risk, including the possible complete loss of your investment. In addition to being an illiquid investment with an uncertain liquidity date, these investments may have other risks involving:

- Uncertainties in the real estate development process, which may result in increased costs, delays.
- Uncertain or changing market conditions relating to the future disposition of properties.
- Possible unforeseen costs or liability associated with the properties.
- Competitive pressures on selling price.
- Possible conflicts of interest.
- Possible requests for additional capital to maintain your ownership share.
- Uncertainty regarding future taxes.

The past performance is no guarantee of future results.

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