For income
A rental ADU that actually pencils.
At $3,000 – $5,000/month gross rent and model pricing from $223,000 to $343,000, many Bay Area ADUs cash-flow break even between year 8 and 12, and add meaningful appraised value on day one.
Rent comps by Bay Area city (2026)
| City | 1 BR rent | 2 BR rent | Payback horizon |
|---|---|---|---|
| Mountain View | $3,200 – $3,800 | $4,200 – $5,000 | 8 – 11 yrs |
| Palo Alto | $3,500 – $4,200 | $4,500 – $5,500 | 8 – 10 yrs |
| Los Altos | $3,200 – $3,800 | $4,200 – $5,000 | 9 – 11 yrs |
| Menlo Park | $3,300 – $4,000 | $4,300 – $5,200 | 8 – 11 yrs |
| Cupertino | $3,200 – $3,800 | $4,200 – $5,000 | 9 – 11 yrs |
| Sunnyvale | $3,000 – $3,600 | $4,000 – $4,800 | 9 – 12 yrs |
| Redwood City | $2,900 – $3,500 | $3,800 – $4,600 | 9 – 12 yrs |
| San Jose | $2,600 – $3,200 | $3,400 – $4,200 | 10 – 13 yrs |
Ranges reflect long-term (30+ day) rents SHAPE clients have achieved in 2025–2026. Payback assumes ~55% net margin after taxes, insurance, and maintenance.
The rental-ready spec (built in, not upgraded)
A rental ADU isn't the same as a family ADU. SHAPE builds these features in from the drawings, no expensive retrofits when your first tenant moves in:
- Separate electric meter, tenants pay their own PG&E bill, no monthly arguments
- Separate address, for mail, deliveries, and clean tax records
- Private entry & private outdoor space, a real front door, not "through the side gate"
- Sound insulation, extra acoustic batts on the shared-wall side, resilient channels on ceilings if there's a unit above
- Durable finishes, LVP flooring, quartz counters, and hardware chosen for a 10-year tenant cycle
- In-unit laundry, stacked washer/dryer in every unit, always
- Off-street parking or bike storage, where the lot supports it
The math, honestly
Take Mountain View. A two-bedroom Model 2 starts at $263,000 all-in. Rented at $4,500/month, that's $54,000/year gross, roughly $30,000/year net after taxes, insurance, and maintenance. The exact payback depends on the fixed quote for your lot, financing, vacancy, taxes, insurance, and maintenance.
And that's the pessimistic case. Rents on the Peninsula have compounded at 3–5% per year for a decade. If that continues, your effective payback is closer to 6–8 years.
We built the ADU cost calculator so you can run your own numbers before you talk to us.
Frequently asked
- Is it legal to rent out my ADU in the Bay Area?
- Yes. California state law explicitly allows long-term (30+ day) rentals of permitted ADUs statewide. Short-term rentals (under 30 days, Airbnb-style) are set city by city; most Bay Area cities restrict or prohibit them, so plan on long-term.
- How much does an ADU add to my property value?
- Peninsula ADUs typically appraise at $150–$400 per added square foot. For a 750 sq ft unit that's roughly $150,000–$300,000 of added appraised value, often close to what you paid to build it, on day one.
- Do I need a separate meter?
- Not legally, but strongly yes. A separate PG&E meter costs about $3,000–$8,000 upfront and eliminates every landlord-tenant argument about utilities. SHAPE plans for it in the drawings so PG&E's install is straightforward.
- What's the tax situation?
- Rental income is taxable, but you also depreciate the ADU over 27.5 years, which typically shelters most of the cash-flow. Talk to a CPA, most Bay Area rental ADUs show a paper loss for the first several years even while generating real cash.
- How fast can I be collecting rent?
- Typical SHAPE timeline is 2–4 months design + permit and 2–4 months build. Realistically, sign this month and you're collecting rent 4–8 months out.
Run the numbers on your lot.
A free 30-minute call. We'll pull rent comps for your block, size the biggest unit your lot allows, and give you an all-in price and a payback horizon.
