ADU Investing In Danville: 30‑Day Rental Rules & ROI

Thinking about adding an ADU for rental income in Danville, but unsure how the 30-day rule affects your plan? You’re not alone. Many East Bay homeowners want steady cash flow without turning their home into a revolving door of short stays. In this guide, you’ll learn how Danville’s rental rules work, what to expect for costs, and how to model realistic ROI so your ADU investment performs. Let’s dive in.

Danville’s 30-day rental rule

Danville requires that any ADU or JADU rented out must be leased for terms longer than 30 days. In simple terms, short-term or nightly vacation rentals in ADUs are not allowed. The Town’s ADU page outlines this rule clearly, and California’s ADU statute enables local governments to set that minimum rental term. See the Town’s ADU info and the state law that authorizes local 30-day minimums for context.

• Town guidance: Accessory Dwelling Units in Danville
• State authority: California Government Code §65852.2
• Local enforcement reference: Danville Municipal Code - Short Term Rentals

What this means for your strategy

• Plan for long-term or month-to-month leases, not nightly STRs.
• Consider mid-term demand like relocating professionals, contractors, or medical staff on 3- to 6‑month stays.
• Your marketing and underwriting should match 30-plus day tenancy.

What you can build in Danville

Danville allows attached ADUs, detached ADUs, and JADUs, with size limits that vary by type and lot. Setbacks and height depend on the unit and site, and ADUs up to certain sizes may qualify for simplified standards under state rules. For a specific property, confirm the exact standards and plan set with the Town.

Parking basics

Danville generally requires one off-street parking space for a new ADU, with several exceptions that can reduce costs and ease approvals. Common exceptions include units within a half-mile of public transit, conversions of existing space, and certain on-street permit situations. Review the parking section of the municipal code and confirm with Planning before you commit to a design. See: Danville ADU parking standards

Preapproved plans and faster review

The Town’s Garden Cottage program includes prechecked, permit-ready plan options intended to shorten review times and reduce soft costs. You’ll still confirm site-specific details like utilities, setbacks, and parking, but preapproved plans can streamline your path from idea to permit. Start with the Town’s ADU page and speak with Planning about current plan sets and fees.

Costs that drive ROI

Bay Area ADU costs vary widely by scope, site conditions, and utility work. Recent regional builder data suggests rough ranges such as $80k–$150k for many garage or interior conversions, $150k–$350k for typical detached builds, and $350k-plus for higher-end projects. Use local contractor bids for accuracy and include contingencies for utilities and site work. For a current market overview, see a Bay Area cost breakdown from a regional builder analysis: ADU building costs and hidden fees.

Operating expenses commonly run 30–50 percent of gross rent, depending on who pays utilities, maintenance needs, management, and reserves. Many investors underwrite using a conservative 35–50 percent until actuals are known. See commonly referenced investor guidelines: Estimating rental operating expenses.

For taxes, the County Assessor typically issues a supplemental assessment for the new construction value of your ADU. Your base assessment for the original home is generally preserved under Prop 13, and the ADU’s value is added as new construction. Learn how supplemental assessments work: State Board of Equalization guidance.

State rules that matter locally

California has streamlined ADU approvals and limited certain fees, and it permits localities to require 30-day minimum rental terms. Owner-occupancy rules have evolved in recent years, with state updates limiting many local requirements. For a current policy overview, review the state’s ADU resources: HCD ADU policy and handbook.

If your property lies in unincorporated Contra Costa County rather than the Town of Danville, review county-specific guidance and preapproved plans here: Contra Costa preapproved ADUs.

ROI examples for Danville ADUs

Below are simple, illustrative scenarios. Always replace assumptions with real contractor bids, current rental comps, and your lender’s terms before you invest.

Scenario A - Garage conversion

• Assumptions: $120,000 all-in build cost; $2,500 monthly rent; 40 percent operating expense ratio; ~1 percent supplemental tax on the ADU’s value.
• Result: Annual NOI ≈ $16,800 and an all-cash NOI yield around 14.0 percent.
• Read: Expense guidelines and tax approach noted above.

Scenario B - Mid-range detached ADU

• Assumptions: $250,000 build cost; $3,500 monthly rent; 40 percent operating expense ratio; ~1 percent supplemental tax.
• Result: Annual NOI ≈ $22,700 and an all-cash NOI yield around 9.1 percent.
• Takeaway: Solid yields if you control build costs and keep turnover low.

Scenario C - Higher-end detached ADU

• Assumptions: $420,000 build cost; $4,500 monthly rent; 45 percent operating expense ratio; ~1 percent supplemental tax.
• Result: Annual NOI ≈ $25,500 and an all-cash NOI yield around 6.1 percent.
• Takeaway: Higher capex compresses cash returns, so weigh non-cash benefits and consider value-engineered designs.

Compliance and ROI checklist

• Confirm zoning, setbacks, height, and parking with the Town’s Planning team.
• Verify the 30-day minimum rental term applies to your plan and location.
• Ask the Permit Center for a current fee and plan-check estimate.
• Get at least two local contractor bids and include a utility/contingency buffer.
• Model expenses using conservative ratios and include management and reserves.
• Budget for supplemental property taxes and appropriate insurance coverage.
• If in an HOA, review ADU design rules. California Civil Code §4751 limits HOA restrictions that effectively prohibit ADUs. See: Civil Code §4751.
• If outside Town limits, check county preapproved plans and fees: Contra Costa preapproved ADUs.

Who benefits from a Danville ADU

• Households seeking steady long-term income with 30-plus day tenants.
• Owners planning multigenerational living or future caregiver space.
• Investors focused on predictable cash flow rather than nightly rental volatility.
• Homeowners looking to add resale appeal with flexible, compliant living space.

Ready to plan your ADU strategy?

If you want help pressure-testing costs, rents, and timelines on your Danville property, let’s talk. The Jenn Collins Group pairs local permitting know-how with investor-minded underwriting so you can make confident decisions. Reach out to the Jenn Collins Group to start your ADU plan and get market-aligned numbers for your address.

FAQs

Are short-term rentals allowed in Danville ADUs?

• No. Danville requires ADU and JADU rentals to be for terms longer than 30 days, so nightly or vacation rentals are not permitted.

What parking is required for a new ADU in Danville?

• Generally one off-street space is required, with exceptions for units near transit and certain conversions. Confirm your lot’s rules with Planning.

How will my property taxes change after I build an ADU?

• Expect a supplemental assessment for the ADU’s new construction value, which increases your tax bill. The original home’s base assessment is generally preserved.

Do I need to live on-site to rent my ADU?

• State updates have limited many local owner-occupancy requirements, but always confirm current rules with the Town and review the HCD ADU handbook.

Can my HOA block me from building an ADU?

• HOAs cannot impose provisions that effectively prohibit qualifying ADUs, but reasonable design standards may apply. Review your CC&Rs and coordinate early.