Thinking about adding an ADU to your Redwood City property to create extra income? You are not alone. The key decision is how you plan to use it. In Redwood City, using a new ADU for short stays like Airbnb is largely off the table, while renting long term is both compliant and practical. In this guide, you will learn the local rules, the build‑to‑rent advantages, costs and timelines, and the steps to launch a steady rental the right way. Let’s dive in.
Redwood City rules at a glance
Redwood City permits ADUs in residential zones and offers tools to speed up approvals. The city’s ADU page explains sizes, setbacks, parking, fees, and pre‑reviewed plan options. Start there for the latest standards and submittal checklists. Review Redwood City’s ADU guidelines.
Short‑term rental rules are different. The city states that short‑term rental of ADUs is not allowed unless the unit was registered before January 1, 2020. In other words, most new ADUs cannot be listed on platforms for stays under 30 days. See the city’s policy here: Redwood City short‑term rentals.
State law also matters. California requires ministerial approvals for ADUs that meet objective standards and allows cities to require rentals of 30 days or longer for ADUs. For statewide context and best practices, see HCD’s ADU resource page.
If you use a pre‑approved plan, a new state law aims to speed things up. AB 1332 requires local programs for pre‑approved plans and allows a 30‑day review window for qualifying detached ADUs. Learn more from this summary of California’s 2024 housing laws.
Build to rent beats Airbnb
Legal compliance
Renting your ADU for 30 days or longer aligns with both state policy and Redwood City’s rules. Using a new ADU for short‑term stays risks violations because the city prohibits short‑term rental of most new ADUs. Check the short‑term rental page for details.
Income stability and demand
The Peninsula’s rental market is strong. Recent snapshots show many one‑ and two‑bedroom homes in Redwood City often rent in the roughly 3,000 to 4,000 dollar range depending on size, features, and location. Use local comps and current data sources like Zumper’s local snapshots to estimate achievable rent for your ADU.
Lower overhead and risk
Short‑term hosting adds costs and workload: frequent turnovers, platform fees, transient occupancy tax filings, and potential neighborhood impacts. Long‑term tenancy streamlines operations, reduces turnover, and lowers enforcement risk under the city’s short‑term rental rules.
Costs, taxes, and payoff
Typical build costs
Bay Area ADU projects vary widely by size, design, and site conditions. A practical planning range is about 150,000 to 475,000 dollars total, with per‑square‑foot costs often around 200 to 450 dollars or more for mid‑to‑higher finishes. Use this as a starting point and get local bids. Source: Bay Area ADU cost overview.
City fees and requirements
Redwood City lists application checklists, pre‑review plan options, and example base permit fees, and requires a fire‑flow test for most new detached ADUs. Many impact fees are exempt for units under 750 square feet in line with state law. Always confirm current fees and requirements on the [city’s ADU page](https://www.redwoodcity.org/departments/community-development-department/planning-housing/planning-services/planning-codes-development-standards/accessory-dwelling-unit-ordina ce).
Property tax effects
In San Mateo County, your existing home usually keeps its Proposition 13 base. The newly built ADU is assessed at its market value and added to your tax bill as a separate increment. Expect a modest increase tied to the ADU, not a full reassessment of your main home. See the county’s guidance: San Mateo County Assessor ADU page.
Estimating your payoff
Your break‑even depends on build cost, financing, rent, vacancy, maintenance, insurance, and taxes. Run conservative scenarios and include a contingency. A well‑located ADU with steady long‑term rent can provide meaningful cash flow and boost resale appeal.
Permitting and timeline
Steps to approval
- Check feasibility and site constraints. San Mateo County’s ADU Resource Center offers step‑by‑step guidance and tools at the county ADU resource hub.
- Choose a design. Redwood City accepts pre‑reviewed plans and is implementing a local plan gallery. Pre‑approved plan sets can reduce design time and help with expedited review under AB 1332.
- Submit a complete application. Use the city’s ADU checklist and building permit process, and plan for a fire‑flow test if you are building a detached unit.
- Complete construction with inspections. Factory‑built options can shorten on‑site work but still require foundation, utility, and inspection steps.
How long it takes
With a pre‑approved plan, state law targets a 30‑day review for qualifying detached ADUs. Standard ministerial reviews generally occur within 60 days when applications are complete. Actual timelines vary with utility coordination, contractor availability, and site conditions.
Set up your long‑term rental
Lease and compliance
Use a clear written lease and follow California’s tenant protections. AB 1482 covers rent caps and just‑cause rules for many properties, with specific exemptions. Review current guidance and confirm your scenario here: California Tenant Protection Act (AB 1482).
Insurance and operations
Call your insurer to add landlord coverage. Set a realistic budget for maintenance and occasional vacancy. If you plan to self‑manage, create simple checklists for tenant screening, move‑in condition reports, and routine upkeep.
Owner checklist
- Confirm eligibility and setbacks for your lot on the city’s ADU page.
- Compare pre‑approved plans to speed permitting under AB 1332.
- Gather contractor bids and include a 10 to 20 percent contingency.
- Budget for utilities, fire‑flow testing for detached ADUs, and permits.
- Model rent, taxes, insurance, and maintenance with conservative assumptions.
- Finalize a standard lease and screening process before marketing.
- Do not rent until you pass final inspection and receive occupancy.
Avoid common mistakes
- Designing first and checking rules later. Confirm setbacks, height, and size early.
- Underestimating utility upgrades. Ask about electrical and sewer capacity up front.
- Banking on short‑term rental income. New ADUs generally cannot operate as short‑term rentals in Redwood City.
- Skipping insurance changes. Add landlord coverage before you sign a lease.
- Listing before final sign‑off. Wait for final inspection and occupancy approval.
Ready to explore whether an ADU makes financial sense for your Redwood City property and long‑term goals? For local market context, rent comps, and a resale‑minded strategy, connect with Darlene Perry for a friendly, data‑driven consultation.
FAQs
Can I Airbnb a new ADU in Redwood City?
- No. Redwood City prohibits short‑term rental of ADUs unless the unit was registered before January 1, 2020. New ADUs must be rented for 30 days or longer. See the city’s short‑term rental rules.
What ADU types does Redwood City allow?
- The city permits detached, attached, and conversion ADUs that meet objective standards. Start with the city’s ADU guidelines and California’s HCD ADU overview.
How much rent can a Redwood City ADU earn?
- Rents vary by size, finishes, and location. Recent local snapshots show many one‑ and two‑bedroom homes around 3,000 to 4,000 dollars monthly. Check current comps like Zumper’s local snapshots.
What are typical ADU costs in the Bay Area?
- Total project budgets often range from about 150,000 to 475,000 dollars depending on type and site. Review this Bay Area ADU cost overview and get local bids.
Will my property taxes go up if I build an ADU?
- Yes, but usually only for the ADU portion. The county adds the new ADU’s assessed value to your existing base. See the San Mateo County Assessor ADU page.
How long does ADU permitting take?
- With pre‑approved plans, qualifying detached ADUs may get a 30‑day review. Otherwise, state law targets ministerial review in about 60 days when complete. Timelines vary with utilities and construction. For guidance, see HCD’s ADU page and Redwood City’s ADU guidelines.
