NYC ADU Rental Income: How Much Can You Actually Earn?

Every homeowner considering an ADU eventually asks the same question: how much money will this thing actually bring in? Not the optimistic projection from a contractor trying to sell you a build. Not the vague "it pays for itself" reassurance. The real numbers — what tenants are actually paying for ADU-type units across New York City's five boroughs in 2026.

The short answer is that ADU rental income in NYC ranges from roughly $1,400 to $3,500 per month, depending on your borough, the size of the unit, the quality of finishes, and whether the unit has features like a private entrance, parking, or laundry. That is a wide range, so this guide breaks it down in detail — borough by borough, with ROI calculations and tax considerations that most homeowners overlook.

Borough-by-Borough Rent Ranges for ADUs in 2026

Rental prices for ADUs vary dramatically across the five boroughs. These ranges are based on current market rents for studio and one-bedroom units in residential neighborhoods — the closest comparables to what a typical ADU offers. Rents for ADU-type units (basement apartments, backyard cottages, above-garage units) generally fall slightly below market rate for traditional apartments because they lack some building amenities, but they compensate with privacy and a neighborhood feel that many tenants prefer.

Manhattan: $2,500 – $3,500/month

Manhattan ADUs are rare because the housing stock is predominantly multi-family. However, in the northern neighborhoods where one- and two-family homes exist — Inwood, Washington Heights, and parts of Harlem — ADU rents are strong. A finished one-bedroom basement unit in Inwood can command $2,500 to $2,800 per month. A well-appointed detached cottage (where lot size permits) could push $3,200 to $3,500. These numbers reflect Manhattan's overall rental premium, even in its most residential corners.

The demand is there. Northern Manhattan has strong transit access (A, 1, and 4 trains), and tenants who want Manhattan addresses without Manhattan high-rise prices are a natural fit for ADU-style living.

Brooklyn: $1,600 – $2,800/month

Brooklyn is one of the strongest ADU rental markets in the city. The borough has large swaths of one- and two-family housing in zoning districts that qualify for ADUs, and tenant demand is relentless.

In high-demand neighborhoods like Park Slope, Carroll Gardens, and Prospect Heights, a finished ADU can fetch $2,400 to $2,800 per month. In neighborhoods further east and south — East New York, Canarsie, Flatbush, and East Flatbush — rents settle into the $1,600 to $2,200 range, which is still substantial given the lower construction costs in those areas.

Brooklyn ADU owners benefit from a tenant pool that includes young professionals priced out of traditional apartments, graduate students, and remote workers who value quiet, separate-entrance living. Check out our East New York eligibility guide and Canarsie eligibility guide for neighborhood-specific details.

Queens: $1,600 – $2,400/month

Queens offers what may be the best ADU economics in the city. Construction costs are comparable to Brooklyn's outer neighborhoods, but Queens has significantly more eligible lots — larger properties, more detached homes, and more R3/R4 zoning districts that are squarely in the ADU-eligible sweet spot.

In neighborhoods like Flushing, Bayside, and Forest Hills, a well-finished one-bedroom ADU rents for $2,000 to $2,400 per month. In Jamaica, Hollis, and Cambria Heights, expect $1,600 to $2,000 per month. The lower end still produces strong returns when paired with Queens' relatively lower construction costs.

Queens also has the advantage of diverse tenant demand — families, airport workers (JFK and LGA proximity), and professionals commuting to both Manhattan and Long Island. Our Flushing neighborhood guide and Jamaica neighborhood guide cover these areas in detail.

Bronx: $1,400 – $2,000/month

The Bronx has significant ADU potential that most homeowners underestimate. Neighborhoods like Riverdale, Pelham Bay, Throggs Neck, and Country Club have the right mix of zoning, lot sizes, and tenant demand. Rents for ADU-type units in these areas run $1,600 to $2,000 per month.

In more affordable sections — Eastchester, Wakefield, and Williamsbridge — rents are $1,400 to $1,700 per month. While these are the lowest nominal rents among the boroughs, the Bronx also has the lowest construction costs and property values, which means the percentage return on investment can actually be the highest in the city.

Staten Island: $1,400 – $2,000/month

Staten Island is arguably the most ADU-ready borough. The entire island is dominated by one- and two-family detached homes on lots large enough for backyard cottages. Zoning is overwhelmingly residential and low-density — exactly what the ADU program targets.

Rent ranges mirror the Bronx: $1,400 to $1,700 in the southern end (Tottenville, Great Kills, Annadale) and $1,700 to $2,000 closer to the ferry terminal (St. George, Stapleton, Tompkinsville). Our Tottenville neighborhood guide has details on one of the island's strongest ADU zones.

What Factors Affect Your ADU Rent?

Within any given neighborhood, your ADU's rent can swing by $400 to $800 per month depending on how you build it. These are the factors that have the biggest impact on what a tenant will pay:

Unit Size

A studio ADU (350-450 sq ft) rents for 20-30% less than a one-bedroom (500-700 sq ft). If your lot and budget allow for a true one-bedroom layout with a separate living area, that is almost always worth the additional construction cost. The rent premium over a studio more than covers the extra square footage cost in most boroughs.

Quality of Finishes

This is where many homeowners leave money on the table. A basic-finish ADU with builder-grade materials rents at the bottom of the range. A unit with quartz countertops, modern fixtures, in-unit washer/dryer, and good lighting rents at the top. The difference can be $300 to $500 per month, and the upgrade cost is typically $15,000 to $25,000 — which pays for itself in the first year of higher rent.

Private Entrance

Tenants pay a premium for not having to walk through your house. A separate, private entrance adds $100 to $200 per month to achievable rent and dramatically expands your tenant pool. Detached ADUs have this by default. For basement conversions, a side entrance or rear entrance is worth prioritizing in your design — it is one of the highest-value features you can add.

Parking

In Queens, Brooklyn, Staten Island, and the Bronx, a dedicated parking spot adds $100 to $200 per month to rent, and in some neighborhoods, it is the difference between getting applicants and not. If your property has driveway space or can accommodate a parking pad near the ADU, factor this into your layout planning.

Laundry

In-unit laundry (a compact washer/dryer combo or stacked unit) adds approximately $75 to $150 per month in achievable rent. Shared laundry access to your home's machines is worth less. No laundry at all puts you at a disadvantage against competing rental listings. A ventless combo unit costs $1,200 to $2,000 installed — it pays for itself within a year.

ROI Calculations: When Does Your ADU Pay for Itself?

The fundamental question for any ADU investment is: how long until the rental income covers the construction cost? Here are realistic payback calculations for different scenarios, assuming full occupancy and accounting for the expenses listed in the next section.

Scenario 1: Basement Conversion in Queens

• Construction cost: $120,000
• Monthly rent: $1,800
• Annual gross income: $21,600
• Annual expenses (insurance, maintenance, vacancy allowance): $3,200
• Annual net income: $18,400
• Payback period: 6.5 years
• 10-year net profit: $64,000 (after construction cost recovered)

Scenario 2: Detached Cottage in Brooklyn

• Construction cost: $280,000
• Monthly rent: $2,200
• Annual gross income: $26,400
• Annual expenses: $4,500
• Annual net income: $21,900
• Payback period: 12.8 years
• 10-year net profit: ($61,000) — still paying off construction, but property value increase of $150K-250K offsets this

Scenario 3: Detached ADU in Staten Island

• Construction cost: $220,000
• Monthly rent: $1,700
• Annual gross income: $20,400
• Annual expenses: $3,800
• Annual net income: $16,600
• Payback period: 13.3 years
• 10-year net profit: ($54,000) — offset by estimated property value increase of $120K-180K

Scenario 4: Premium Basement Conversion in Brooklyn

• Construction cost: $160,000
• Monthly rent: $2,400
• Annual gross income: $28,800
• Annual expenses: $4,000
• Annual net income: $24,800
• Payback period: 6.4 years
• 10-year net profit: $88,000 (after construction cost recovered)

The pattern is clear: basement conversions have the fastest payback because construction costs are significantly lower, while rents are only modestly less than detached units. Detached ADUs take longer to pay off through rent alone but deliver the largest property value increases. Use our ADU cost calculator to run numbers for your specific property.

Tax Implications You Cannot Ignore

ADU rental income is taxable, and the tax structure is more nuanced than most homeowners expect. Here is what you need to know:

Rental Income Reporting

All ADU rental income must be reported on your federal tax return (Schedule E) and your New York State return. You are taxed on net rental income — gross rent minus allowable deductions. This is not optional, and the IRS receives copies of rent payments reported by tenants and payment platforms.

Deductible Expenses

The good news is that most expenses associated with your ADU rental are deductible:

• Mortgage interest allocable to the ADU portion of your property
• Property taxes allocable to the ADU
• Insurance premiums for the ADU or landlord coverage — see our ADU insurance guide for what you need
• Maintenance and repairs specific to the ADU
• Utilities you provide to the tenant (or a proportional share)
• Property management fees if you hire a manager
• Depreciation (see below)

Depreciation: Your Biggest Tax Advantage

You can depreciate the construction cost of your ADU over 27.5 years (the IRS residential rental property schedule). On a $200,000 ADU, that is approximately $7,273 per year in depreciation deductions — a paper loss that reduces your taxable rental income without costing you any cash. For a homeowner in the 24% federal tax bracket, depreciation saves roughly $1,745 per year in taxes.

Important: depreciation is recaptured when you sell the property. If you sell, you will owe tax on the accumulated depreciation at a rate of up to 25%. This is not a reason to avoid depreciation — it is essentially an interest-free loan from the government — but you should be aware of it.

Property Tax Impact

Adding an ADU will increase your property's assessed value, which means higher property taxes. In NYC, the increase depends on your tax class (most ADU-eligible homes are Tax Class 1) and the assessed value increase. Expect your annual property tax bill to increase by $1,500 to $4,000, depending on the borough and the size of the ADU. This should be factored into your ROI calculations — the scenarios above already account for it in the expense figures.

ADU Income vs. Other NYC Rental Investments

How does ADU rental income compare to other ways NYC homeowners can generate rental returns?

ADU vs. Traditional Investment Property: Buying a separate rental property in NYC requires a minimum of $150,000 to $300,000 in down payment and closing costs for even a modest multi-family. An ADU built for $120,000 to $280,000 on land you already own delivers comparable monthly income with no additional mortgage qualification, no second property tax bill, and no separate building management.

ADU vs. Short-Term Rental (Airbnb): NYC's Local Law 18 severely restricts short-term rentals. Most ADUs cannot legally be listed on Airbnb for stays under 30 days unless you are present in the unit. A long-term ADU tenant provides steadier, legal income without the regulatory risk, guest turnover, or furnishing costs of short-term rental.

ADU vs. Garage Conversion (Non-ADU): Converting a garage to living space without going through the ADU program means it cannot be legally rented. An unpermitted unit carries code violation risk, no insurance coverage, and zero value at resale. The ADU program exists specifically to make these conversions legal and valuable.

ADU vs. House Hacking (Renting Rooms): Renting a room in your home on a platform like SpareRoom yields $800 to $1,500 per month in NYC but sacrifices your privacy. An ADU generates comparable or higher income in a completely separate unit with its own entrance, kitchen, and bathroom.

Maximizing Your ADU Rental Income

Based on the factors above, here is a checklist for maximizing what your ADU can earn:

• Build a one-bedroom, not a studio — the rent premium justifies the added cost
• Invest in finishes — quartz counters, modern tile, good fixtures. Budget an extra $15K-25K
• Include a private entrance — non-negotiable for top-of-market rent
• Add in-unit laundry — a ventless combo unit for under $2,000 installed
• Provide a parking spot if your property allows
• Install good soundproofing between the ADU and your home (for basement units)
• Use a pre-approved plan to reduce design costs and accelerate permitting — browse available plans
• Screen tenants carefully — vacancy is the biggest income killer

Next Steps: Calculate Your Property's ADU Income Potential

Every property is different. Your lot size, borough, neighborhood, and budget all affect what you can build and what it will earn. Here is how to get started:

1. Check your property's ADU eligibility — free, instant results based on your address
2. Run the cost calculator — get estimated construction costs and rental income for your specific property
3. Browse pre-approved plans — see what ADU designs are available for NYC homeowners
4. Book a free consultation — talk to an ADU specialist about your property's income potential

The math on ADUs works for most NYC homeowners. The question is not whether an ADU will generate income — it is how much income, and how quickly you start capturing it. The sooner you begin the process, the sooner rent checks start arriving.