Becoming an ADU/Garage Conversion Landlord in Los Angeles 

Building an ADU/garage conversion/granny flat on your property is one of the best ways to monetize one of the biggest investments you have -- your house!

How much rent can I charge for my ADU?

When you rent out your ADU/garage conversion/granny flat, there are some things to consider. First of all, consider all the factors of renting into account. This includes screening tenants, placing ads and deciding how to cost-share utilities.

The average rent for an ADU is $1700 a month in Los Angeles. After monthly expenses including utility fees and upkeep costs, you can expect to make about $860 of income per month from your ADU! 

What are some of my responsibilities as a landlord?

Becoming a landlord comes with many responsibilities. 

First of all, you are required by law in the city of Los Angeles to maintain your property for your tenant. Things like doors, windows, plumbing should be maintained and no vermin allowed to run around the place. In fact, you (the landlord) is not supposed to collect rent until the unit is considered habitable.

Landlords are not allowed in their tennant’s unit without giving 24-hour notice first, unless it is an emergency. That means, you must give your tenant 24-hour notice if someone is coming to make repairs, or if you want to show the unit to future renters.

Also, it is illegal to discriminate against a tenant who is using a Section 8 voucher in order to rent the unit.  That doesn’t mean you have to rent to a potential tenant with a Section 8 voucher. However, you cannot use that voucher as the sole reason for rejecting that person’s application.

How do I find a tenant for my ADU/Garage Conversion?

Once you decide on how much you want to charge for your ADU/garage conversion/granny flat, you’ll want to find that perfect tenant. When thinking about screening tenants, you may want to consider what qualities you are looking for. As ADUs are very close to your main residence, you may want to consider what type of person you want to rent your ADU.

You will want to find competent, reliable tenants for your ADU. You may want to:

• Advertise your ADU on rental and real estate websites.
• List your ADU in the newspaper or online resources, such as Craig’s List or Facebook Marketplace.
• Contact a property management company or real estate agent for help
• Word-of-mouth!

What kinds of rental agreements are there?

There are typically two types of rental agreements that landlords use -- month-to-month and a yearly lease.

A month-to-month lease is automatically renewed each month unless either you or the tenant gives written notice to end it. According to California law, this type of lease cannot be terminated in the middle of any month unless you agree to end it. If you (the landlord) want to end the tenancy, you can only do so at the end of the month and only after giving 20 days’ written notice. 

This type of rental agreement is made for a specific period of time, typically one year. This agreement must be written, signed and notarized if the tenancy agreement is going to be longer than one year. With a lease agreement, the tenancy automatically ends on an agreed upon date. It can be renewed after that.

With both types of rental agreements,  a written contract is recommended to avoid any possible misunderstandings. If you need help writing a standard agreement, you can get one from a real estate agent or have one prepared by a legal advisor.

Will my ADU/Garage Conversion fall under rent control?

Chances are, your brand new ADU/garage conversion/granny flat will not be eligible for rent control for at least 15 years. 

The state of California instituted rent throughout the state beginning in January 2020. The law makes it illegal for residential landlords to raise rent more than 5 percent, plus the local rate of inflation, in one year. However, that law only applies to buildings that are 15 years old or older. That means, if you build an ADU now, it will not be eligible for rent control for 15 years. 

In addition, the state law does not cover areas that already have rent control laws on the books. Currently, the cities of Los Angeles, Santa Monica, West Hollywood, Inglewood, and Beverly Hills currently do have their own rent control laws. Los Angeles’ rent control laws cover residences constructed before 1978. Single family homes are exempt.

However, your property could come under rent control restrictions in certain circumstances. Say you decide to move into your new ADU and rent out your main residence. Your property no longer is a single-family home. And if your main residence was built before 1978, it qualifies for rent control. 

Can I evict an ADU tenant?

While you never look forward to evicting a resident from your ADU/garage conversion/granny flat, there are circumstances in which you may have to. 

Evictions can only occur after the tenant has lived in your ADU for 12 months, or 24 months if a new tenant has been added. There are two types of evictions allowed in the city of Los Angeles -- at-fault reasons and no-fault reasons. If you evict a tenant for no-fault reasons, you must pay the cost of relocation.

Reasons for no-fault evictions include:

• The owner or a member of his/her family will occupy the unit
• Intent to demolish or substantially remodel the unit
• Compliance with a government or court order, or local ordinance that requires vacancy.

Reasons for at-fault evictions include:

• Non-payment of rent
• Nuisance
• Waste
• Criminal activity
• Subletting in violation of the lease
• Denying entry to the landlord
• Using the unit for unlawful purpose
• Breach of lease
• Failing to leave the unit after providing the owner with a written intent to terminate tenancy

For answers to more questions about evictions, you may want to consult a legal advisor or property manager.

While there are many responsibilities associated with owning an ADU/garage conversion/granny flat, it is an incredible opportunity to generate extra income. Call the experts at Los Angeles Garage Conversion today for your free estimate at (818)-532-0482