How LotFoundry Estimates ADU Cost, Rent and Payback
Methodology · Reviewed 2026-10-24
Every build-cost, rent and payback figure on LotFoundry comes from one planning model. The free calculator and the city cost guides run it with countywide inputs; the Studio runs it with inputs for your address. This page sets out the formulas, where each input comes from, how the Studio's inputs differ and what the model leaves out, so you can check a number before you rely on it.
The figures are planning estimates for a new detached ADU. They are not a contractor's bid, an appraisal or financial advice, and they do not replace a site visit.
Build cost
Hard cost starts from a construction base per square foot that depends on the exterior finish:
| Exterior finish | Base per sq ft |
|---|---|
| Cedar | $340 |
| Lap Siding | $315 |
| Stucco | $330 |
| Board & Batten | $355 |
The model adds a roof premium of $8 per square foot for a flat roof or $18 for a gable roof, with none for a shed roof, and a flat $9,000 allowance for windows and doors. A soft-cost allowance of 18% on top covers design, engineering and permits. The range runs from 8% below that midpoint to 15% above it, rounded to the nearest $1,000.
The construction base is a national LotFoundry planning assumption, not a survey of contractor bids in any one city. On the calculator and the city cost guides, the regional cost factor stays at 1.0, so a San Diego guide uses the same construction base as a Los Angeles one. The Studio applies a regional factor for your address, described below. Either way, treat build cost as the least local number on the page.
Not included, so price them from quotes for your lot:
- Land, financing costs and conversions of existing space
- Unusual site work such as long utility runs, retaining walls or difficult soil
- Local fees beyond what the soft-cost allowance covers
Rent
Rent comes from the Fair Market Rent (FMR) that the U.S. Department of Housing and Urban Development publishes for the metropolitan area or rural county the lot is in. HUD sets FMRs at the 40th percentile of gross rents for standard-quality rental units, so the anchor is deliberately modest rather than a top-of-market listing price.
The unit's size picks the bedroom class. On the cost guides, 400 sq ft uses the studio FMR, 600 and 800 sq ft use the one-bedroom FMR, and 1,200 sq ft uses the two-bedroom FMR. The conservative scenario is the FMR itself; the market and optimistic scenarios multiply it by 1.12 and 1.25.
The calculator and cost guides use the county FMR. The Studio looks for a more specific source first, as described below, and every Studio result carries a provenance line naming its rent source, data vintage and confidence.
Operating costs and payback
On the calculator and cost guides, the model sets aside 32.5% of gross rent for vacancy, management, maintenance, insurance, utilities and property tax. What remains is net operating income (NOI). Simple payback divides the cost midpoint by one year of NOI.
Payback ignores loan payments, income tax, rent growth and any change in property value. Use it to compare sizes and scenarios, not as a forecast of your returns.
Worked example: 600 sq ft in San Diego County
A 600 sq ft detached unit with the default cedar finish, shed roof and conservative rent:
| Construction base | $204,000 |
|---|---|
| Openings allowance | $9,000 |
| Soft-cost allowance | $38,340 |
| Cost midpoint | $251,340 |
| Range shown on the page | $231,000–$289,000 |
| Monthly rent (one-bedroom FMR) | $2,459 |
| Annual NOI | $19,918 |
| Simple payback | 12.6 years |
HUD FMR · San Diego County, CA · HUD FY2026 FMR (effective 2026-05-21; seed extract) · Medium confidence. See every size on the San Diego ADU cost page, or change the inputs in the ADU cost calculator.
How the Studio adjusts the inputs for your address
The Studio uses the same formulas, but resolves three inputs for the specific address:
- A regional construction factor from LotFoundry's seed index of factors by ZIP, county and state: 1.26 for San Diego County and 1.30 for Los Angeles County. These are curated planning figures, not verified bids, and the Studio's provenance line marks costs and expenses as planning assumptions.
- A state-level operating-expense ratio: 30.5% of gross rent in California.
- Rent from live comparable listings when that source is available, otherwise the most specific HUD FMR on file: ZIP, then county, then state, then the national figure.
So a Studio result for a San Diego County address will usually show a higher build cost than the guide tables. The same 600 sq ft unit, with county-level rent and no live comparables:
| Figure | Guides and calculator | Studio, San Diego County |
|---|---|---|
| Regional cost factor | 1.00 | 1.26 |
| Cost range | $231,000–$289,000 | $291,000–$364,000 |
| Operating expenses | 32.5% | 30.5% |
| Simple payback | 12.6 years | 15.4 years |
Permit and impact fees
The soft-cost allowance is a budget line, not a fee schedule. The city and county guides quote official fees with an as-of date where the agency publishes them, and otherwise point to the agency's own estimate. Reconcile your actual fees against the allowance rather than adding them on top.
Under state law, an ADU of 750 square feet of interior livable space or less pays no local impact fees, and larger units pay in proportion to the main house; school districts and utilities set their own charges (California HCD ADU Handbook).
How the rules and numbers stay current
- Each city or county guide lists the official documents it was checked against, with the date it was checked.
- A rule we could not verify is left off the page rather than guessed, and a figure that is an estimate is labeled as one.
- Each guide is re-checked against its sources at least every 90 days; an automated check fails when a guide passes that window.
- Rent anchors name their HUD release and effective date wherever the figures appear.
- Found a figure that does not match its source? Send it through the feedback page with a link to the source, and we will check it.
Method last reviewed 2026-10-24.