ADU Rental Income: Assumptions and Rules to Check

A lot of ADU plans start with a spreadsheet and a rent figure found online. The rent figure is usually the weakest number in it. The others, what the unit costs, what it costs to run and how often it sits empty, get less attention than they deserve. And the rules on renting, which vary city by city in Salt Lake County, can take options off the table before any of that math matters.

This page does not estimate what your ADU will earn. Nobody can do that honestly before the unit is designed and the market is tested. It explains what to assume, what to check, and which rules shape the income.

The assumptions behind any income estimate

Every rental projection rests on a short list of inputs. Write each one down and note where it came from.

RentBased on comparable long-term rentals of similar size, privacy and parking near you, checked when you are close to deciding. Online averages mix very different units.
VacancyTime between tenants, cleaning and repairs. Even a strong unit will not be occupied every month of every year.
Operating costsUtilities you pay (many cities here do not allow separate meters), insurance changes, maintenance, and any rental license renewal.
Your timeFinding tenants, leases, repairs, or the cost of a manager if you hire one.
TaxesHow rental income and the added value of the property are taxed is a question for your tax adviser, not a builder.
Project costThe full cost to build, including design, fees and site work. See the Utah ADU cost guide.

Run the numbers at the rent you hope for, and again at a lower rent with more vacancy. If the project only works in the first case, that tells you something important. Our ADU ROI guide explains how to put these pieces together.

Owner occupancy: the rule that shapes everything

Every city we serve ties ADU approval to the owner living on the property. That means an ADU usually adds one rental, not two. The wording differs in ways that matter:

Millcreek requires the property to be owner occupied, and records a notice with the Salt Lake County Recorder stating that it contains an ADU and is owner-occupied.
Salt Lake City requires the owner to live on the property, where the owner can include a person related by blood, marriage or adoption to someone on the deed, with exceptions for duplex and multi-family properties.
Murray requires the owner to live in either the main house or the ADU, and "at no time receive rent for the owner occupied unit." A recorded owner occupancy affidavit is part of the application, and a future buyer must reauthorize the ADU to keep using it.
South Salt Lake requires the main house or the ADU to be occupied by the owner of record, and a notarized owner occupancy affidavit is recorded with the Salt Lake County Recorder.
Holladay allows the owner or an immediate family member to satisfy the rule.
Cottonwood Heights defines owner occupancy as living at the site at least 200 days per calendar year.
Sandy ties the ADU permit to the owner: it ends on a sale of the property or a change of residence, and it is not transferable to new owners.

Our ADU owner occupancy page goes city by city in more detail.

Short-term rentals are mostly off the table

State law lets cities prohibit renting an internal ADU for less than 30 consecutive days (Utah Code 10-21-303). A new state law on detached ADUs, Utah Code 10-21-304, took effect October 1, 2026 and lets cities prohibit renting a detached ADU for less than 90 consecutive days. Local codes control, and most cities here use their power:

Salt Lake City bans short-term rental of the ADU, and the recorded covenant says neither the ADU nor the main house can be used that way.
Murray's code says the main dwelling and the ADU will not be used as a short-term rental, and the city does not allow an ADU and an approved short-term rental on the same property.
South Salt Lake prohibits short-term rental of both the main house and the ADU, and ADU tenants may not sublease.
Holladay requires a rented ADU to be rented for at least 30 consecutive days, and Cottonwood Heights says ADUs "shall not be used as short-term rentals."
Millcreek prohibits short-term rental of a detached ADU. Sandy does the same for detached ADUs, and allows an attached ADU to alternate between short-term and long-term rental only with approvals for both.

If a nightly-rental plan is part of your thinking, read ADU short-term rental rules before anything else.

Licenses, inspections and recorded documents

Renting an ADU is treated as operating a rental, with paperwork that recurs:

Millcreek requires a business license to rent an ADU.
Salt Lake City requires a rental business license and enrollment in its landlord/tenant program before the zoning certificate is issued.
Murray lists a long-term rental business license on its ADU application, at $106.
South Salt Lake requires a rental business license, issued only after a city inspection.
Holladay subjects a rented ADU to an annual license.
Sandy requires an administrative special use permit and a business license that is renewed each year.
Cottonwood Heights requires an ADU permit or license that is renewed each year after an inspection.

None of these is large next to the cost of building, but they belong in the operating budget, and a lapsed license can put the approval itself at risk in some cities.

Design choices that affect rentability

Some of the income question is settled on the drawings. A separate entrance, windows that give privacy from the main house, sound separation, storage, laundry and a parking space the tenant can actually use all make a unit easier to rent. Occupancy caps matter too: Millcreek limits attached and detached ADUs to 2 adults and any number of children, which shapes who the unit suits. We plan these with the rental use in mind, starting from what the property can support.

HOAs

Utah law says an association may not restrict or prohibit renting an internal ADU that complies with land use, building, health and fire codes (Utah Code 57-8a-209). No state statute gives detached ADUs the same protection, so a detached rental in an HOA neighborhood depends on the association's documents. See ADU HOA rules.

Questions about ADU rental income

How much rent will my ADU bring in?

We do not predict rents, and you should be wary of anyone who gives you a number before seeing the unit and the property. Rent depends on the unit's size, layout, finish, privacy, parking and location, and on the market at the time you lease it. The honest approach is to research comparable long-term rentals near you when you are ready to decide, and test the plan against a lower figure too.

Can I rent my ADU on Airbnb?

In most of Salt Lake County, no. Salt Lake City, Murray, South Salt Lake, Holladay and Cottonwood Heights do not allow ADUs to be rented for less than 30 days, and Millcreek and Sandy prohibit short-term rental of detached ADUs. Sandy allows an attached ADU to alternate between short-term and long-term rental only with approvals for both. Plan on long-term tenants unless your city's code clearly says otherwise.

Do I have to live on the property to rent the ADU?

In every city we cover, yes, in some form. The details differ: who counts as the owner, whether a family member can satisfy the rule, and whether an affidavit or notice is recorded against the property. Check your own city's wording before you plan around renting both units.

Can my HOA stop me from renting an ADU?

For an internal ADU, Utah law says an association may not restrict or prohibit renting one that complies with land use, building, health and fire codes. That protection does not cover detached ADUs. Read your CC&Rs and talk to the association before you design.

ADU Rental Income: What to Check Before You Count On It