An existing ADU and a property with “ADU potential” may look similar in a listing, but I wouldn’t value them the same way. One is an asset you can evaluate today. The other requires you to spend money, time and take on risk to create the value yourself.

California now allows up to two detached ADUs on qualifying single-family lots—a change that could make some Los Angeles properties considerably more interesting. But the opportunity isn't as simple as finding a big backyard. Here's what I'm looking for before I'd pay a premium for that potential.

A big backyard doesn’t automatically mean a good ADU opportunity. Here’s how I evaluate Los Angeles properties by looking at lot layout, access, detached garages, site conditions, utilities and the economics behind adding another unit.