ADU Cash Flow in La Habra: A Practical Framework

Thinking about turning your La Habra backyard into steady monthly income? With the right accessory dwelling unit, you can add living space, offset your mortgage, and boost long-term value. The key is a simple, realistic framework that shows what it costs, what it could earn, and how to finance it. This guide walks you through La Habra’s rules, fees, financing options, and a practical cash-flow model. Let’s dive in.

What La Habra allows

La Habra permits ADUs and JADUs by right on lots with an existing or proposed home, following California state law. The city also offers pre-approved plan sets that can speed review and reduce design costs. You can review the process and standards on the City’s ADU page. Explore the city’s overview and resources on the City of La Habra ADU page.

Key standards to note

• Setbacks are typically as little as 4 feet on side and rear lot lines for ADUs, and detached units must maintain building separation. Review details in the La Habra municipal code.
• Parking: one space is often required for an ADU with bedrooms, with flexibility for tandem and driveway parking if safety rules are met. See the municipal code standards.
• Minimum rental term: ADUs and JADUs may not be rented for less than 31 days. Short-term rentals are not allowed for ADUs. Confirm current rules in the municipal code.
• Utility and fire reviews: projects near utility easements or in certain areas may need utility or County Fire review. The City recommends a pre-application consult on the ADU page.

Fees, timing, and permits

Permit costs vary by scope. La Habra publishes a Master Schedule that lists plan check and permit fees, water and sewer connection charges, and meter set fees. For example, the schedule lists a typical small water meter connection fee and a separate meter set charge, plus sewer connection items. Review current line items in the Master Schedule of Fees (effective July 1, 2024), and request a project-specific estimate from Building & Safety on the ADU page.

What it costs to build

Statewide research shows a wide cost band. A UC Berkeley Terner Center survey found a median ADU construction cost near $150,000 with substantial variation by size and type. Smaller garage conversions can come in well under that, while custom detached units often exceed $200,000. Use the Terner Center median as a starting point, then refine with local bids. See the study summary from the Terner Center.

Soft costs and contingency

Budget for design and engineering, plan check and permit fees, Title 24 energy compliance, inspections, and utility connection charges. Water meter and connection fees, plus sewer items, are listed in the city’s Master Schedule of Fees. Include a contingency of 10 to 20 percent for surprises.

Financing your ADU

You have options: cash, a HELOC or home-equity loan, a cash-out refinance, or a construction-to-permanent loan. Fannie Mae resources confirm lenders can finance homes with ADUs through standard mortgage and renovation products. Review guidance on ADUs and underwriting at Fannie Mae.

FHA updated its policy so lenders can use a portion of ADU rental income to help you qualify on certain programs, which can materially improve your numbers. See the policy changes in HUD’s update: FHA allows ADU income in qualification. California’s CalHFA ADU Grant has historically offered up to $40,000 toward predevelopment and closing costs for eligible owners, though funding cycles are limited. Check current status on CalHFA’s ADU page.

Estimating rent and revenue in La Habra

Market sources show La Habra rents for small units generally in the low to mid $2,000s per month, depending on size and finish. That is broadly consistent with statewide ADU rent medians near $2,000 in Terner Center surveys. Use nearby 1-bed and studio listings to set your baseline, then adjust for private entry, on-site laundry, parking, and utilities. See statewide rent findings in the Terner Center survey. Remember, La Habra requires rentals of at least 31 days per the municipal code.

A simple ADU cash-flow model

Use these steps to get to a clear monthly number.

1) Define your goal

• Choose your primary outcome: long-term rental income, housing for family, or resale value uplift. This drives rent and cost assumptions.

2) Capture up-front costs

• Hard costs: contractor bid for your ADU type and size. A conservative benchmark is the Terner Center median of about $150,000 for modest units, but local quotes vary widely. Source: Terner Center.
• Soft costs: design/engineering, plan check and permit fees, water and sewer connection charges, and inspections. Confirm items in the Master Schedule of Fees. Add a 10 to 20 percent contingency.

3) Choose financing and estimate monthly debt

• Model at least two paths: a HELOC or second mortgage, and a construction-to-permanent or renovation loan. Check whether projected ADU income can count in qualification under FHA or lender rules. See FHA’s update on ADU income and Fannie Mae’s ADU guidance.

4) Set realistic rent and operations

• Baseline market rent: pick a figure in the La Habra range for your size and finish.
• Vacancy: use 5 to 10 percent for a single ADU.
• Operating items: utilities you cover, routine repairs, a maintenance reserve of 3 to 5 percent of gross, property management if used, and insurance or tax changes.

5) Do the math

• Monthly cash flow = Monthly rent × (1 − vacancy) − operating expenses − monthly debt service.
• Annual NOI = Effective gross income − operating expenses.
• Simple payback (years) = Total up-front cash invested ÷ Annual net cash flow.

6) Stress test and refine

• Test low, median, and high rent scenarios.
• Add 10 to 15 percent to construction costs to test overruns. Review state code context at California HCD.
• Confirm you meet La Habra’s minimum rental term of 31 days using the municipal code.

Value and resale considerations

Beyond cash flow, an ADU can support resale value. FHFA data for California shows properties with ADUs have had higher median appraised values and faster median value growth than those without over 2013 to 2023. Your uplift will depend on unit quality and neighborhood demand, so plan to validate with a local market analysis and an appraiser. Review the statewide trend in the FHFA analysis.

La Habra quick-start checklist

• Book a pre-application consult with City Planning and Building & Safety using the ADU page.
• Get two to three contractor bids with itemized hard and soft costs.
• Verify all permit and utility fees in the Master Schedule of Fees, and ask Building & Safety for a written estimate.
• Talk with lenders about HELOCs, construction-to-perm, or FHA 203(k), and whether ADU income can help qualify. See FHA’s ADU income policy and Fannie Mae’s guidance.
• If eligible, check current status of the CalHFA ADU Grant.

If you want help pressure-testing your numbers and planning next steps, we are here to make the process clear and manageable. For local rent comps, fee estimates, and a tailored financing game plan, connect with Andrea De La Rosa for a friendly, no-pressure consult.

FAQs

Will La Habra let me build an ADU on my single-family lot?

• Yes, ADUs and JADUs are allowed by right subject to objective standards; confirm site specifics and options on the City’s ADU page.

What are the minimum rental terms for ADUs in La Habra?

• ADUs and JADUs cannot be rented for fewer than 31 days, per the municipal code.

How much does an ADU typically cost to build?

• The Terner Center reports a median near $150,000 statewide with wide variation by type and scope; get local bids to refine your estimate (Terner Center survey).

What city fees should I expect beyond construction costs?

• Plan for plan check and permit fees plus water and sewer connection and meter set charges; see the Master Schedule of Fees.

Can projected ADU rent help me qualify for a loan?

• FHA now allows lenders to consider a portion of ADU rental income for qualification on certain programs, and Fannie Mae supports mortgages with ADUs; review FHA’s update and Fannie Mae guidance.

Will an ADU increase my resale value?

• FHFA data shows California homes with ADUs have had higher median appraised values and faster value growth than homes without, though outcomes vary by unit quality and location; see the FHFA analysis.