Estimate accessory dwelling unit construction costs and calculate rental income ROI with financing and payback period analysis.
This calculator turns a square footage and a cost-per-square-foot figure into a total construction estimate, then layers on financing terms (down payment, interest rate, loan term) and expected monthly rent to project a mortgage payment, monthly cash flow, cash-on-cash return, and a payback period. What people get wrong most often is treating the cost-per-square-foot number as authoritative: it's whatever you type in, so if you leave out permits, utility hookups, or site prep, the total cost and every downstream ROI figure understate the real project.
A concrete input and expected output from the current implementation.
Input
600 sq ft detached ADU, $300/sq ft construction cost, 20% down, 7% interest rate, 30-year loan, $1,800/month expected rent
Expected output
Total cost $180,000. Loan amount $144,000. Monthly mortgage payment approximately $958. Monthly cash flow approximately $842. Annual cash flow $10,104. Cash-on-cash ROI approximately 28.1%. Simple payback period approximately 3.6 years.
600 x $300 gives the $180,000 build cost; 80% financed at 7% over 360 months amortizes to about $958/month, and dividing the $36,000 down payment by the $10,104 annual net cash flow gives the payback period.
Square footage is multiplied by the entered cost-per-square-foot to produce a base construction total. There's no regional cost database behind it - the per-square-foot figure, and any additional line items like permits, design fees, or utility hookups, all come from what the user enters, so the estimate is only as good as those inputs.
The down payment splits off from total cost, and the remainder amortizes over the entered rate and term using the standard fixed-payment loan formula. Monthly rent minus that payment gives net cash flow, which is annualized into a cash-on-cash return and divided into the down payment to produce a simple, non-discounted payback period in years.
No. The base calculation is just square footage times your cost-per-square-foot input. Permits, water/sewer or electrical hookups, impact fees, and site prep need to be added on top, either folded into a higher per-square-foot rate or entered as separate costs, or the total will understate what the build actually costs.
No. It's a simple cash-recovery calculation: down payment divided by annual net rental cash flow. It doesn't model property value appreciation, loan principal paydown as equity, depreciation deductions, or resale proceeds, so the actual financial payback is often faster than this number alone suggests.
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