The financial return on the capital invested in an ADU project, expressed as a percentage. Cash-on-cash ROI = annual cash flow ÷ down payment.
ADU ROI is driven by build cost, financing terms, achievable rent, and operating costs. California ADU 10-year cash-on-cash ROIs typically range from 30% (Bay Area, financed) to 80% (Central Valley, equity-funded) depending on inputs.
Part of the BackyardADU California ADU Glossary — plain-English definitions of the regulatory, construction, and financing terms you'll encounter during a California ADU project.