Accessory dwelling units (ADUs) are rapidly reshaping California’s residential investment landscape. In 2025, the state continues to expand access and reduce barriers for ADU construction, making it a key area of opportunity for investors seeking both short- and long-term returns. At BERG, we work closely with investors and homeowners to navigate these changes and bring ADU projects to life efficiently and compliantly. Here’s a breakdown of what investors need to know right now.
Why ADUs matter to investors in 2025
ADUs are no longer a niche concept. California has embraced them as a strategy to address the state’s housing shortage, offering incentives and regulatory streamlining to encourage their development. For real estate investors, this opens the door to scalable, high-demand residential units that can be added to existing properties.
Whether you’re looking to boost rental income, expand a real estate portfolio, or increase resale value, understanding the evolving regulatory environment is essential.
Key updates to California’s ADU laws in 2025
1. Faster permitting timelines
Local agencies are now required to approve or deny ADU applications within sixty days, reducing delays that once hindered project timelines.
2. Reduced or waived impact fees
Many jurisdictions are reducing or eliminating development impact fees for ADUs under 750 square feet, helping lower upfront costs.
3. Relaxed parking requirements
In areas near public transit or in historic urban zones, parking requirements for ADUs continue to be reduced or waived entirely.
4. Multi-family property allowances
Owners of multi-family buildings can now build more ADUs per lot in some municipalities, depending on lot size and configuration.
5. Streamlined conversion rules
Garage conversions, basement buildouts, and interior unit renovations are now easier to permit under updated state guidelines.
Considerations for investors entering the ADU market
Understand local regulations
While the state provides a general framework, local zoning ordinances still apply. Investors should review specific city guidelines before moving forward.
Budget for construction and timeline
ADUs can vary in cost based on type and location. Investors should plan for professional design, permitting, site prep, and buildout.
Evaluate rental demand
Consider the rental market in the area. ADUs typically appeal to renters seeking affordability, flexibility, and privacy.
Assess long-term value
An ADU can increase total property value and attract buyers looking for multi-generational living or rental potential.
Why partner with BERG
BERG specializes in designing and building ADUs that meet California’s evolving regulations and investors’ financial goals. We manage every step—from zoning review to final inspection—with a focus on efficiency, compliance, and return on investment.
Explore smart, scalable investment opportunities with BERG. Contact us to discuss your ADU strategy today.
