ADU as a Retirement Strategy: How NYC Homeowners Are Building Passive Income
If you're within 10 or 15 years of retirement — or you're already there — an ADU might be one of the smartest financial moves you can make.
Here's the thing: most retirement planning advice focuses on savings, investments, and Social Security. But for New York City homeowners, there's another asset that's often overlooked: the property you're already living in.
An ADU turns that asset into an income-generating machine — without requiring you to sell, downsize, or move.
The Income Angle
A well-built ADU in New York City can bring in anywhere from $1,600 to $3,500 per month in rental income, depending on the borough and the size of the unit. Over a year, that's $19,200 to $42,000 — money that can cover a significant chunk of your living expenses in retirement.
And unlike a stock portfolio, rental income tends to grow over time as rents increase. It's a form of passive income that keeps paying as long as the unit is occupied.
The Property Value Angle
Adding an ADU doesn't just generate income — it increases what your home is worth. Studies from other cities that legalized ADUs earlier (like Los Angeles and Portland) show that properties with ADUs tend to sell for 20–35% more than comparable homes without one.
In a city where the median home price is already around $800,000, that's a meaningful bump.
The "Age in Place" Angle
For many retirees, the idea of leaving their home — the neighborhood, the community, the memories — is the hardest part of getting older. Building an ADU lets you stay put while also creating space for a family member, a caregiver, or a tenant who helps offset costs.
Some homeowners even swap: they move into the ADU and rent out the main house for more money. It's unconventional, but it works.
Is it Worth the Investment?
Most ADU projects in NYC pay back their construction costs within 7 to 10 years through rental income alone. After that, it's essentially free money — plus the long-term property value increase.
That's a pretty compelling retirement strategy.
Thinking About It? Let's Talk.
A free ADU assessment from Second Key will show you what's possible on your property — including a realistic look at costs and potential rental income.