Phase 7
Rent & Move-In
- Understand what it takes to rent out your ADU
- Consider affordable pricing for your unit
- Make a long-term plan for the care and upkeep of your ADU
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.
Rent
Step-by-Step
Before you begin: Make sure your ADU has a new street address assigned. This should have happened during the permit application process (you may have filled out a form and/or paid a fee), but you can confirm with Planning staff.
Step 1
Complete Preliminary Steps
Prepare to rent your unit by getting insurance, setting up utilities, and developing a plan to handle the finances.
Step 2
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.
TOOLS AND RESOURCES
Step 3
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.
Step 4
Write Your Lease
You will need to create a lease (or rental agreement if renting month-to-month) for both you and the tenant to sign. This agreement should clearly identify all the expectations for you and your future tenant. Even if you are renting to a friend or family member, creating an agreement is always a good idea to avoid possible confusion or conflict. Sample agreements can be found online, and you can use our ADU Worksheets to help.
TOOLS AND RESOURCES
Step 5
Find a Tenant
Research how to advertise your ADU and successfully select a good tenant. Along with word 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.
In El Dorado County, units are typically advertised in local community-based Facebook groups and in the Windfall and Gold Panner.
Once you select a tenant, collect a security deposit and the first month’s rent. It’s a good idea to conduct a move-in inspection when they sign the lease.
Step 6
Manage Your Rental Unit
Think through a long-term plan for the care and upkeep of your ADU, how shared responsibilities will be split, and how to address any issues that might occur with your tenant.
Other issues to consider:
- Maintenance: According to state law, it is your responsibility as a landlord to maintain a “habitable” ADU. Take note that you’ll need to give your tenant(s) a 24 hours’ notice before you or maintenance providers can enter the unit.
- Rent increases: Make sure you understand the rules about increasing the rent – California Tenants: A Guide to Residential Tenants’ and Landlords’ Rights and Responsibilities is a good resource.
- Eviction: Hopefully you will not have problems with your tenant, but if problems do arise that cannot be resolved, you will need to consider an 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.
TOOLS AND RESOURCES
No. ADUs and JADUs cannot be rented short-term.
El Dorado County: Minimum 30 day rental.
Placerville: Minimum 31 day rental.
Rental income is a major benefit of having an ADU or JADU on your property – for many people, it supplements their fixed income and provides an opportunity to grow their savings. Remember, short-term rentals are prohibited.
Make sure to consider potential income when planning the finances for your project.
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 below for resources on understanding rental laws, tenants’ rights, and more, and our ADU Worksheets for help with your lease terms.
