Build Your Own ADU.
Turn your equity into cash flow.
Your home's equity can do more than sit there. Keep the house, add an accessory dwelling unit, and put rental income to work for you.
“Don't sell yet, ride the wave. Play the market, don't let the market play you.” — Carlos Sotelo
Call or text 818.447.5224 · carlos@carlossotelo.com
California just made ADUs easier and cheaper
Cities can be held accountable for delays
On Oct 23, 2026, California's Second District Court of Appeal ruled in Shi v. City of Palos Verdes Estates that a homeowner may sue a city for damages caused by delays in approving an ADU permit that state law requires to be approved ministerially and on time (generally within 60 days of a complete application). The ruling lets the claim go forward; it did not award damages.
Sources: Court opinion B350195 · HousingWire
Two detached ADUs by right (AB 956)
Starting Jan 1, 2027, cities must ministerially approve up to two detached, new-construction ADUs on a lot with an existing or proposed single-family home. Cities may still limit each to 800 sq ft, apply 4-ft side/rear setbacks and the state height limits.
Sources: AB 956 text · BB&K analysis
Lower impact fees (SB 1117)
ADUs of 750 sq ft or less are already exempt from impact fees. Starting Jan 1, 2027, for up to two ADUs on a lot, impact fees on a larger ADU are charged only on the area above the first 750 sq ft. Utility connection and capacity fees are not covered.
Sources: SB 1117 text · California YIMBY
Local zoning, utilities, HOA rules, fire zones and site conditions still apply. Confirm details with your city and qualified professionals.
From equity to rent check in 5 steps
Free equity & feasibility review
We look at your estimated equity, lot, zoning, and what type of ADU could fit.
Financing options
Compare a cash-out refinance, HELOC, or construction loan with a licensed lender of your choice.
Design & permits
Plans, plan check, and permit submission. State law sets approval deadlines for complete applications.
Build
Construction with a licensed general contractor partner. Verify any contractor at cslb.ca.gov.
Lease up
Screening, leasing, and ongoing management through Equity Guard Rent.
Build your own style model
Pick a type, size, style and finishes. The preview and the example numbers update as you go, then send your design to Carlos.
Your ADU design
Example build cost range
Example monthly rent range
Rough, illustrative ranges for Greater LA only — not a bid, appraisal or guarantee. Real costs depend on your site, city fees, utilities, design and contractor pricing; real rents depend on location, condition and market.
Keep the home. Let the ADU pay you.
1 · Leverage your equity
Instead of selling to unlock equity, borrow against part of it to fund the build, if the numbers work for you.
2 · Keep the home
Keep your property, your long-term appreciation potential, and your options open.
3 · Build for rental income
A well-designed ADU can create monthly rent that helps cover the new financing and more.
4 · Let Equity Guard Rent manage it
ADU owners who work with Carlos get discounted management through Equity Guard Rent: leasing, screening, rent collection, maintenance, and renewals. Ask for current ADU-owner pricing.
Example cash-flow snapshot
Hypothetical 1-bed, 650 sq ft detached ADU in the San Fernando Valley, funded with a $250,000 HELOC/construction loan.
| Example monthly rent | $2,600 |
| Example loan payment (interest-only, ~8%) | −$1,667 |
| Example property tax increase (~1.2%/yr on $250k) | −$250 |
| Insurance, maintenance & vacancy reserve | −$250 |
| Discounted property management (example) | −$156 |
| Example net monthly cash flow | ≈ +$277 |
Read this first
These numbers are made up for illustration and are not a projection, offer, or guarantee. Your rent, build cost, interest rate, taxes, insurance, and vacancy can be very different, and cash flow can be negative. Borrowing against your home puts it at risk if you can't make payments. Talk to a licensed lender, a CPA, and your city before you commit.
Beyond cash flow, many owners also consider long-term appreciation and housing family members.
ADU questions, answered
Can I build an ADU without selling my home?
Yes. Many owners fund an ADU with existing equity through a cash-out refinance, HELOC, or construction loan, keep the main home, and rent the ADU. A licensed lender can tell you what you qualify for.
How many ADUs can I build on a single-family lot?
Starting Jan 1, 2027, AB 956 requires cities to ministerially approve up to two detached, new-construction ADUs (each can be limited to 800 sq ft with 4-ft side/rear setbacks) on a single-family lot. Other combinations, like a junior ADU or garage conversion, may also be possible. Site and local rules still apply.
What are impact fees and how does SB 1117 change them?
Impact fees are one-time city or district charges for new development. ADUs of 750 sq ft or less are exempt. From Jan 1, 2027, for up to two ADUs on a lot, a larger ADU is only charged on the square footage above 750. Utility connection and capacity charges are separate.
What if my city takes too long to approve my permit?
State law sets deadlines for acting on complete ADU applications. The Oct 23, 2026 Shi v. City of Palos Verdes Estates ruling says a homeowner may sue for damages caused by unlawful delay. That is a legal question, so talk to a California attorney about your situation.
How much does an ADU cost and how much can it rent for?
It varies widely by type, size, site work, finishes and location. Use the design tool above for an illustrative range, then get real bids from licensed contractors and a rent analysis from Carlos.
Do you build the ADU?
No. Carlos is a REALTOR® who helps you evaluate the opportunity and connects you with independent licensed professionals (lenders, designers, a licensed general contractor partner) and then manages the rental through Equity Guard Rent. You choose who you hire.
Get your free equity & feasibility review
Tell us about your property and your goal. Carlos will reach out personally.
Call or text 818.447.5224
Email carlos@carlossotelo.com
Real estate agent? Book a 15-min agent intro.