In early 2022 a young couple bought a modest three-bedroom house on a quiet street in North Hills, just west of Northridge. They loved the neighborhood but knew the monthly mortgage would push their budget to the edge. California’s pro-housing laws offered a way out. By adding a detached two-story structure in the backyard—legally classed as a Senate Bill 9 (SB 9) primary unit on the lower level and an accessory dwelling unit (ADU) on the upper—they could create two full-sized rentals, bring in income to cover most of the mortgage, and build long-term wealth at the same time.
The first step was a zoning check. Within an hour the couple learned their R-1 lot qualified for both an SB 9 split and an ADU. No hearings, no variances, no surprise easements—just a straight-line path to permits. With that green light the project moved to design. Space in the yard was tight, so the architect stacked the homes to preserve outdoor area for all three households. The ground floor became a 1,200-square-foot residence with three bedrooms and two baths. A private exterior stair rose to an 800-square-foot flat above, offering two bedrooms and one bath. Both units would feel completely separate thanks to dedicated front doors, individual mailboxes, their own LADWP electric meters and trash service, and private outdoor entries.
Quality mattered. Quartz counters replaced basic laminate in the kitchens. Bathrooms received full-height subway tile instead of fiberglass surrounds. Energy-efficient windows paired with two-by-six exterior walls and R-21 insulation kept utility costs down. Tankless water heaters saved closet space, and a five-kilowatt solar array trimmed electric bills for tenants and reduced the couple’s operating costs. Outside, drought-tolerant landscaping and a small cedar fence screened each new home from the main house, giving everyone a sense of privacy without wasting water or maintenance budget.
Total hard construction—the slab, framing, roofing, stucco, interior finishes, mechanical, electrical, and plumbing—closed at roughly $420,000. Professional design, engineering, and title 24 energy calculations added $20,000. City impact fees, plan-check charges, and inspection costs reached $30,000. Solar panels, fencing, planting, and other extras rounded out another $40,000. All-in the couple spent about $510,000.
Rentals in this part of the Valley command solid prices, especially for modern, move-in-ready units with separate utilities. Comparable three-bedroom homes were leasing near $3,800 per month, while fresh two-bedroom ADUs fetched around $3,000. Before construction wrapped, the couple began marketing photos online and held showings during the final punch-list week. Within eleven days signed leases hit the inbox: $3,850 for the ground-floor three-bedroom, $2,950 for the upstairs two-bedroom. Tenants pay their own electric, gas, and water because of the separate meters. Gross scheduled rent now stands at $6,800 each month—money that almost erases the original mortgage and leaves room for reserves and future upgrades.
Operating expenses for taxes, insurance, maintenance, and a small management fee absorb roughly 27 percent of that rent. After those costs the couple nets about $4,900 per month. In practical terms one backyard project turned a stressful mortgage into comfortable positive cash flow less than two years after buying the property.
.jpg)
Before any work began, local sales data placed the house at roughly one million dollars. Adding 2,000 square feet of new, fully permitted living area—together with the proven rental income stream—changed everything. Based on recent closed sales of similar tri-plex setups in North Hills and Northridge, a conservative market estimate now values the entire parcel near $1.6 million. Even after subtracting the $510,000 build cost, the couple gained about $100,000 in fresh equity the day tenants moved in, and their debt-to-income ratio flipped from tight to comfortable.
Design and engineering took barely two months, thanks to clear zoning rules and fast owner feedback. Plan check with Los Angeles required five months; thorough drawings meant all corrections were cleared in the first resubmittal. Six months of construction followed, broken into four tight phases: sitework and slab, panelized framing, mechanical-electrical-plumbing rough-ins, and finishes plus landscaping. The final month overlapped inspections, punch-list fixes, utility sign-offs, and lease-up. Not a single week was wasted.
No construction project runs perfectly. Mid-way through framing, lumber prices jumped fourteen percent. Because the builder had locked material contracts at the start, the spike hit the lumber yard—not the couple. During stucco work a weekend compressor irritated a next-door neighbor; the crew shifted noisy tools to weekdays and erected dust screens, ending the complaint. Black-frame windows suffered a ten-week factory delay industry-wide, yet early ordering—placed while plans were still in plan check—meant those windows arrived exactly when installers needed them. Problems surfaced, but quick communication and written action items kept the schedule intact and prevented costly change orders.
Running individual 200-amp panels to each unit added a few thousand dollars and an extra LADWP inspection. That step paid back immediately. Tenants appreciate paying only for their own use, which reduces billing disputes and encourages responsible energy habits. More importantly, lenders and appraisers treat separately metered units like standalone apartments, which pushes valuation higher than a property with shared utilities. For the couple, the meters were not a luxury—they were an equity and financing tool.
Rental demand in the northwest San Fernando Valley shows no sign of slowing. Year-over-year market data point to steady rent growth near three percent. Even if rents stayed flat, the couple’s net income already covers the mortgage, funds maintenance reserves, and leaves monthly surplus they now route into an index fund. Over the first ten years the principal balance on the original home loan will drop while rents likely rise, compounding the wealth effect.
On the environmental side, the five-kilowatt solar array offsets roughly seven metric tons of carbon dioxide every year—the equivalent of planting around 120 mature trees. Drought-tolerant landscaping slashes outdoor water use by about 70 percent. The new construction meets California’s 2022 Energy Code, meaning better insulation, tighter ducts, and lower operating costs compared with the 1950s-era main house.
This project highlights a few takeaways for any owner thinking about an ADU or SB 9 build:
.jpg)
Two new, code-compliant homes now stand where an unused garage and a patch of grass once sat. The city gained much-needed housing without paving fresh land. Local trades logged more than four thousand paid labor hours. The streetscape looks sharper, the owner’s financial stress is gone, and long-term equity has already climbed six figures.
Success like this is not just for developers or retirees with decades of savings. A young couple, only months into home ownership, unlocked the power of their lot by combining smart design, careful budgeting, and the latest California housing laws. Their experience proves that the right plan—executed with discipline—can turn backyard square footage into real financial freedom, long before the thirty-year mortgage clock runs out.
Explore your ADU possibilities with Gather. We provide ADU planning, design, permitting, and construction management services in California, Georgia, Washington, Oregon and beyond!
