How to Rent Out Your ADU: A Complete Landlord's Guide for California

You've built your ADU, the permits are finalized, and now you're ready to start earning rental income. But if you've never been a landlord before, the process of finding tenants, setting up leases, and managing a rental property can feel overwhelming.

The good news is that renting an ADU isn't fundamentally different from renting any other property. The smaller scale actually makes many aspects easier. Let me walk you through the process from start to finish.

Before You List: Preparation Steps

Verify Your ADU Is Legally Rentable

First, confirm that your ADU has a certificate of occupancy or final sign-off from your local building department. You cannot legally rent an unpermitted ADU, and doing so exposes you to significant liability if anything goes wrong.

Also check whether your city has any owner-occupancy requirements. Some jurisdictions require that the property owner live in either the main house or the ADU. These rules have been relaxed in many areas, but verify your local situation.

Set Up Separate Utilities

Decide how you'll handle utilities. Options include:

• Separate meters: The cleanest approach. Tenant pays their own utilities directly to the utility company.
• Submetered: You pay the main bill and charge tenant their usage. Requires installing submeters and some bookkeeping.
• Included in rent: You pay all utilities and factor the cost into rent. Simpler but gives tenant no incentive to conserve.

If you're including utilities, research typical usage for a unit your size. Overestimating means you're leaving money on the table. Underestimating means your profit margin shrinks.

Get Landlord Insurance

Your homeowner's insurance policy likely doesn't cover rental activities. You need landlord insurance (also called rental property insurance) that covers the ADU structure, liability if someone is injured on the property, and lost rental income if the unit becomes uninhabitable.

Expect to pay $500 to $1,500 annually for ADU landlord coverage, depending on your location and the unit's value.

Prepare the Unit

Before photographing and showing the ADU, make sure it's move-in ready:

• All appliances working
• Plumbing and electrical in good order
• Fresh paint in neutral colors
• Professional cleaning
• Smoke and carbon monoxide detectors installed and functional
• Locks changed if anyone had previous access

Setting Your Rental Rate

Pricing too high means longer vacancy. Pricing too low means you're leaving money on the table every month. Research is essential.

Research Comparable Rentals

Look at current listings for similar units in your area. Focus on:

• Same number of bedrooms and bathrooms
• Similar square footage
• Similar amenities (in-unit laundry, parking, yard access)
• Same neighborhood or comparable location

Websites like Zillow, Apartments.com, and Craigslist show asking rents for current listings. For what units actually rent for, look at recently leased listings if available.

Factor In ADU Advantages

ADUs often have features that justify premium pricing:

• Privacy: Separate entrance, no shared walls with neighbors in an apartment complex
• Outdoor space: Private patio, yard access, or garden views
• Quiet: Lower density than apartment buildings
• Newer construction: Modern finishes, efficient appliances, better insulation

Don't undervalue these features. Many tenants specifically seek ADUs over apartments and will pay for the lifestyle difference.

Typical ADU Rental Ranges

In Los Angeles County as of 2024:

Unit Type	Typical Monthly Rent
Studio (300-400 sq ft)	$1,400 - $2,000
One-bedroom (500-700 sq ft)	$1,800 - $2,800
Two-bedroom (800-1,200 sq ft)	$2,500 - $3,800

Rates vary significantly by neighborhood. A one-bedroom ADU in Santa Monica commands very different rent than the same unit in the Inland Empire.

Finding Tenants

Creating Your Listing

A good listing includes:

• High-quality photos of every room, plus exterior and any outdoor space
• Square footage and bedroom/bathroom count
• Rent amount and any additional costs (utilities, parking fees)
• Available date
• Lease terms (12-month minimum is standard)
• Pet policy
• Key features (in-unit laundry, parking, new appliances, etc.)
• Location highlights (near transit, walkable to shopping, etc.)

Post on multiple platforms: Zillow, Apartments.com, Craigslist, Facebook Marketplace. Many landlords also use Avail, TurboTenant, or similar property management tools that syndicate listings and manage applications.

Screening Applicants

California law regulates what you can and cannot consider when screening tenants. You're allowed to verify:

• Income (typically requiring 2.5x to 3x monthly rent in gross income)
• Credit history
• Rental history and references
• Employment verification
• Criminal background (with significant restrictions under new laws)

You cannot discriminate based on protected classes including race, religion, national origin, sex, familial status, disability, or source of income (including Section 8 vouchers in most California cities).

Use a consistent screening process for all applicants. Document your criteria before you start showing the unit, and apply the same standards to everyone.

Showing the Unit

ADU showings are usually one-on-one since you're dealing with a single unit rather than a building with multiple vacancies. This gives you a chance to meet potential tenants personally and get a sense of whether they'd be good neighbors.

Be prepared to answer questions about:

• How parking works
• Outdoor space access and maintenance responsibilities
• Any shared amenities or areas
• Your proximity and involvement as the landlord
• Neighborhood characteristics

The Lease Agreement

California has specific requirements for residential leases. Use a California-specific lease form rather than a generic template. Many landlords use the California Association of Realtors residential lease, which is comprehensive and regularly updated for legal compliance.

Key provisions to address:

• Rent amount and due date
• Security deposit (maximum one month's rent for unfurnished units, two months for furnished, under California law)
• Lease term and renewal provisions
• Pet policy and any pet deposits
• Maintenance responsibilities
• Rules about noise, guests, parking, outdoor areas
• Procedures for requesting repairs
• Move-in and move-out inspection procedures

Consider having a real estate attorney review your lease, especially if you've never been a landlord before. A few hundred dollars upfront can prevent expensive disputes later.

Ongoing Landlord Responsibilities

Maintenance

California law requires landlords to maintain rental properties in habitable condition. This includes:

• Functioning plumbing, heating, and electrical systems
• Weather-tight roof, walls, and windows
• Clean and sanitary common areas
• Adequate trash receptacles
• Functioning smoke and carbon monoxide detectors

Respond to repair requests promptly. Not only is this good customer service, but failure to address habitability issues can give tenants legal grounds to withhold rent or terminate the lease.

Rent Collection

Establish a clear system for rent payment. Many landlords now use online payment platforms like Venmo, Zelle, or property management apps. Set expectations in the lease about acceptable payment methods and what happens if rent is late.

California allows a grace period before late fees apply (typically 5 days), and late fees must be reasonable (typically 5% to 10% of rent).

Respecting Tenant Privacy

California law requires landlords to give at least 24 hours written notice before entering a rental unit, except in emergencies. Even though the ADU is on your property, you cannot enter at will. Respecting this boundary is essential for a good landlord-tenant relationship.

Common Landlord Mistakes to Avoid

Underpricing to fill quickly. A vacant ADU feels urgent, but renting $200 below market costs you $2,400 per year. Take time to price correctly.

Skipping screening. A bad tenant costs far more than vacancy. Always verify income, check references, and run credit.

Informal arrangements. "My buddy doesn't need a lease" is a recipe for disaster. Document everything in writing.

Deferred maintenance. Small repairs become big repairs. Address issues promptly to protect your investment.

Violating fair housing laws. Discrimination lawsuits are expensive and reputation-destroying. Know the law and follow it.

The Rewards of ADU Landlording

Yes, being a landlord involves work and responsibility. But ADU landlording has advantages over other rental investments:

• You're on-site, making it easy to address issues and maintain the property
• You can personally vet tenants and choose someone who will be a good neighbor
• There's no property management company taking a cut of your rent
• You build equity while generating income

For many homeowners, ADU rental income makes the difference between comfortable finances and constant stress. That extra $2,000 or $3,000 per month covers a mortgage payment, funds retirement savings, or simply provides financial breathing room.

Sources cited:

• California Department of Consumer Affairs. (2023). "California Tenants: A Guide to Residential Tenants' and Landlords' Rights and Responsibilities."
• California Association of Realtors. (2024). "Residential Lease or Month-to-Month Rental Agreement."