What Goes Into an ADU Feasibility Report in California

Before any ADU project moves to design, a feasibility report answers the three questions every property owner is asking: Can we build it? What will it cost? What's the return? Here's exactly what a professional ADU feasibility report covers in California.

Every ADU project starts the same way. A property owner calls, they've heard ADUs are easier to permit now, they want to add a unit, and they need to know if it's worth pursuing. Before any design work begins, before any contractor is engaged, they need a feasibility assessment.

As a licensed California General Contractor who has personally expedited ADU permits across SFDBI, Belmont, Oakland, and San Jose DSA, I've put together dozens of these reports. Here's what a professional ADU feasibility report actually covers, and why each section matters.

Section 1: Property Overview

The report starts with the basics, APN, zoning district, lot size, existing structure, and overlay districts (Fire Hazard Severity Zone, flood zone, historic district). This is foundational information that determines what's possible before you look at anything else.

Two things that often get overlooked here: lot slope and utility connections. A steep hillside lot changes the feasibility of a detached ADU dramatically. And if the sewer lateral is undersized or the electrical panel doesn't have capacity, those are cost items that need to be surfaced early.

Section 2: California State Law Analysis

California's ADU law changed significantly with the passage of AB 2221 and SB 897, now codified in Government Code §§ 66310–66342. State law preempts local ordinances in many situations, knowing exactly which provisions apply to a given property is one of the most valuable things a feasibility report provides.

Key provisions to check for every property:

–    By-right (ministerial) approval, no discretionary review

–    ADU size limits: up to 850 sf for studio or one-bedroom, 1,000 sf for two or more bedrooms

–    JADU up to 500 sf within the existing structure

–    4-foot rear and side setbacks for new detached ADUs

–    No parking required if within half a mile of public transit

–    Owner-occupancy requirements, waived through 2025 under current law

–    Reduced or waived utility connection fees

Always verify that the local ordinance is HCD-approved. A jurisdiction with a non-compliant ordinance defaults to the state standard, which is often more permissive than the local rules.

Section 3: ADU Configuration Options

A good feasibility report analyzes every ADU type that's physically and legally feasible for the property, not just the one the owner asked about. Often a garage conversion or interior conversion is significantly more cost-effective than a detached new construction ADU, and owners don't know to ask.

The five types to evaluate: Detached ADU (new construction), Attached ADU (addition to the main structure), Garage Conversion ADU, Interior Conversion ADU, and JADU (Junior ADU within the existing structure).

For each feasible type, the report should note the maximum size, estimated construction cost range, and any site-specific conditions that affect feasibility.

Section 4: Financial Analysis

This is the section property owners read most carefully. A professional financial analysis covers estimated development costs by category (design, permits, site prep, foundation, framing, MEP, finishes, contingency), estimated rental income based on local comps, and a simple ROI and payback period calculation.

Be conservative on costs and conservative on rents. An ADU feasibility report that sets unrealistic expectations does nobody any favors, the owner will find out the real numbers eventually, and it's better to know before breaking ground.

Section 5: Permit Process Overview

The final major section covers what permits are required (building, planning, fire, encroachment), estimated timelines based on the specific AHJ, and the inspection sequence from rough through Certificate of Occupancy.

For Bay Area jurisdictions, plan check timelines vary significantly, SFDBI's over-the-counter approval for simple ADUs is very different from a full plan check at Oakland, which can run 6–8 weeks for first round comments. Setting accurate expectations here is part of what makes a feasibility report valuable.

How Long Does a Feasibility Report Take to Prepare?

A thorough ADU feasibility report takes 4–8 hours to research and write from scratch, pulling APN data, checking the local ordinance, verifying HCD compliance status, researching rental comps, and building out the cost estimate.

I built a professional report template that structures all nine sections, from Executive Summary through Disclaimer, so the research and writing can happen faster and the output looks polished enough to hand directly to a client. It's available as an instant Word document download in the PermitBox shop.

→  Get the ADU Feasibility Report Template at etsy.com/shop/PermitBoxShop, 9 sections, CA state law included, instant download, $97.