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.

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.