Can I Convert My Garage Into a Rental Unit in California?

The Short Answer: Yes, You Can

California has some of the most progressive ADU (Accessory Dwelling Unit) laws in the country. If you own a single-family home with an attached or detached garage, state law gives you the right to convert that garage into a legal, rentable living unit. A wave of legislation starting in 2020 removed most of the barriers that cities once used to block these projects: parking requirements, minimum lot sizes, discretionary reviews, and lengthy approval timelines.

Whether you want to generate rental income, house a family member, or add long-term value to your property, a garage conversion is the fastest and most affordable path to a second unit on your lot.

This guide covers the specific laws that make it possible, the two types of units you can build, permit requirements, parking rules, costs, and rental income potential across California and the Bay Area.

The Laws That Changed Everything

Three pieces of state legislation form the foundation of California’s garage conversion framework. Understanding them helps you know your rights when working with your local building department.

Assembly Bill 68 (AB 68)

AB 68 allows homeowners to add both an ADU and a Junior ADU (JADU) on any residential lot. It limits the restrictions that local governments can impose on ADU projects and establishes a ministerial (non-discretionary) approval process. Most importantly for garage conversions, AB 68 prohibits cities from requiring replacement parking when you convert an existing garage or carport into an ADU.

Senate Bill 13 (SB 13)

SB 13 reduced fees for ADUs under 750 square feet, capped the permitting timeline at 60 days, and eliminated owner-occupancy requirements for full ADUs through 2025 (later made permanent). It also prohibited homeowner association (HOA) rules that unreasonably restrict ADU construction.

Assembly Bill 881 (AB 881)

AB 881 further restricted the ability of local agencies to impose setback requirements, lot coverage limits, and floor-area-ratio caps on ADU conversions. For garage conversions that stay within the existing structure’s footprint, side and rear setbacks cannot exceed four feet.

Together, these laws mean that if your garage conversion meets basic health and safety standards, your city must approve it. There is no discretionary hearing, no neighbor notification requirement, and no option for local officials to simply say no.

ADU vs. JADU: Two Paths for Your Garage

When converting a garage into a rental unit, you have two options under California law. The right choice depends on your garage type, your budget, and how you plan to use the space.

Full ADU Conversion

A full ADU is a completely independent living unit with its own kitchen, bathroom, entrance, and utility connections. It functions as a standalone apartment.

• Maximum size: Up to 1,200 square feet (state law), though your garage footprint will likely determine the actual size
• Kitchen: Full kitchen required
• Bathroom: Dedicated, private bathroom
• Entrance: Separate exterior entrance required
• Owner-occupancy: Not required. You can rent out both the ADU and your primary home
• Parking: No replacement parking required under AB 68
• Works with: Attached or detached garages

A standard two-car garage (400-500 square feet) converts well into a studio or one-bedroom ADU with a full kitchen and bathroom.

Junior ADU (JADU) Conversion

A JADU is a smaller unit created from existing space within the primary home or an attached garage. It offers a lower-cost entry point but comes with more restrictions.

• Maximum size: 500 square feet
• Kitchen: Efficiency kitchen only (small cooking appliances, sink, counter space, and storage; no full-range stove required)
• Bathroom: May share a bathroom with the primary home, or include its own
• Entrance: Separate exterior entrance required
• Owner-occupancy: Required. The homeowner must live in either the main house or the JADU
• Parking: If converting an attached garage, some cities may require parking replacement for a JADU (unlike full ADU conversions, where replacement parking is prohibited statewide)
• Works with: Attached garages or space within the primary home only

JADUs make sense when your attached garage is on the smaller side, when you want to minimize construction costs, or when you plan to live on the property and rent out one of the units.

Permit Requirements: What You Need to Get Approved

Garage conversions in California follow a ministerial approval process. This means the city reviews your application against a checklist of objective standards rather than subjecting it to a public hearing or design review board. If your plans meet the requirements, approval is mandatory.

What You Will Need

1. Architectural plans showing the proposed floor plan, elevations, and sections
2. Structural engineering confirming the existing structure can support the conversion (load-bearing walls, roof structure, foundation adequacy)
3. Title 24 energy compliance report demonstrating that insulation, windows, HVAC, and lighting meet California’s energy code
4. Plumbing and electrical plans for new kitchen, bathroom, and utility connections
5. Site plan showing the ADU location on your lot, setbacks, and access

Timeline

California law requires cities to act on complete ADU applications within 60 days. In practice, the full process from plan preparation through permit issuance typically takes three to five months. Working with a design-build firm that has experience with your local building department helps avoid plan corrections and resubmittals that add weeks to the timeline.

Fees

Permit fees vary by city but typically range from $5,000 to $20,000. Under SB 13, impact fees are waived entirely for ADUs under 750 square feet. For larger units, impact fees are calculated proportionally based on square footage relative to the primary home.

Parking: The Rule That Changed the Game

Before California’s ADU reform laws, parking replacement was the single biggest obstacle to garage conversions. Cities routinely required homeowners to build new covered parking spaces to replace the ones lost in the conversion, a requirement that could add $20,000-$40,000 to a project and make it physically impossible on smaller lots.

AB 68 eliminated this barrier entirely for ADU conversions. Local jurisdictions cannot require replacement parking when you convert an existing garage, carport, or covered parking structure into an ADU. This applies statewide, to both attached and detached garages, regardless of how many parking spaces the garage currently provides.

Additional parking exemptions apply if your property is within half a mile of a public transit stop, within a historic district, or within a designated permit parking area.

What a Garage Conversion Actually Involves

Converting a garage into a livable, code-compliant rental unit is more than a cosmetic renovation. Here is what the scope of work typically includes:

Structural and Envelope

• Replacing the garage door with a framed wall, window, or French doors
• Adding insulation to walls, ceiling, and floor (most garages have none)
• Installing drywall on all interior surfaces
• Upgrading or verifying the foundation and slab (moisture barrier, leveling)
• Adding windows for natural light, ventilation, and emergency egress

Mechanical, Electrical, and Plumbing

• Installing a new bathroom (toilet, sink, shower or tub)
• Building a kitchen with plumbing for a sink and connections for appliances
• Upgrading the electrical panel to support a separate living unit
• Adding HVAC (heating and cooling) to meet habitability and energy code requirements
• Running new plumbing lines from the main house connection

Finishes

• Flooring, cabinetry, countertops, lighting fixtures, and paint
• Separate entrance door and hardware
• Interior and exterior lighting

How Much Does It Cost?

Garage conversion costs in California depend on the size of the garage, the condition of the existing structure, the scope of finishes, and your local market.

Cost Category	Estimated Range
Design and engineering	$10,000-$30,000
Permits and fees	$5,000-$20,000
Construction	$100,000-$150,000
Total (Bay Area)	$120,000-$200,000

Bay Area costs tend to land at the higher end of the statewide range due to labor rates, material costs, and stricter local energy requirements. A basic JADU conversion without a full kitchen can come in under $100,000. A high-end ADU with premium finishes, custom cabinetry, and upgraded appliances may approach or exceed $200,000.

For comparison, a detached new-construction ADU in the Bay Area typically costs $250,000-$500,000+. Converting an existing garage saves significantly because you skip foundation work, framing, and roofing.

Rental Income Potential

Garage ADU conversions in the Bay Area command strong rents due to the region’s persistent housing shortage and high demand for smaller, more affordable units.

Location	Monthly Rent Range
San Jose / South Bay	$2,000-$3,500
Peninsula (Palo Alto, Mountain View)	$2,500-$4,000
East Bay (Oakland, Fremont)	$1,800-$3,000
Statewide average	$1,500-$3,000

At the Bay Area median of roughly $2,500/month, a $150,000 garage conversion pays for itself in about five years through rental income alone. Meanwhile, the ADU adds lasting value to your property. Studies show that ADUs in high-demand California markets can increase home value by 20-30%.

San Jose has also implemented incentive programs for ADU construction. The city’s Measure E program has offered up to $50,000 in financial assistance for ADUs that maintain affordability requirements for 15 years.

Local City Variations to Watch

While state law sets the floor for ADU rights, individual cities can still impose certain objective standards. Here are common areas where local rules vary:

• Exterior design standards: Some cities require the ADU exterior to match the primary home in materials, colors, and roofing style
• Maximum unit size: Cities can set local maximums below the state cap of 1,200 sqft, but they cannot go below 800 sqft for a one-bedroom or 850 sqft for units with more than one bedroom
• Utility connections: Some cities require separate utility meters for the ADU; others allow shared connections
• Fire sprinklers: Generally not required for conversions of existing structures, but required for some new-construction ADUs

Always verify your specific city’s ADU ordinance before finalizing plans. In the Bay Area, cities like San Jose, Sunnyvale, Los Gatos, Mountain View, and Palo Alto all have ADU-specific guidelines that supplement state law.

Mistakes to Avoid

Converting Without Permits

Unpermitted garage conversions are a serious risk in California. If discovered, you may face fines, mandatory removal of the improvements, or complications when selling your home. The permitting process exists to ensure the unit is safe, and California’s streamlined ADU laws have made it faster and more affordable than ever. There is no good reason to skip it.

Ignoring Habitability Standards

A legal rental unit must meet California’s habitability standards: adequate heating, ventilation, natural light, hot and cold running water, working plumbing and electrical, and smoke and carbon monoxide detectors. Cutting corners on these items puts your tenants at risk and exposes you to liability.

Underestimating Scope

A garage was not designed for human habitation. Insulation, waterproofing, plumbing, electrical capacity, HVAC, and ventilation all need professional attention. Budget realistically and work with a licensed contractor who has completed garage conversions before.

How Custom Home Handles Garage Conversions

Custom Home Design and Build (CSLB #986048) is a design-build firm based in San Jose that handles garage conversions from initial assessment through final inspection. The design-build model means one team manages your architectural plans, engineering, permits, and construction, eliminating the coordination gaps that cause delays and cost overruns on conversion projects.

During Phase 1 (Design), you receive complete architectural plans, 3D renderings of the finished space, and a locked-in construction price. During Phase 2 (Build), the same team that designed the space constructs it. This continuity is especially valuable for garage conversions, where hidden conditions like moisture damage, undersized electrical service, or foundation issues surface during construction and require fast, informed decisions.

Your Garage Is Sitting on Untapped Value

California law has made it straightforward to convert your garage into a legal rental unit. The parking replacement barrier is gone. Permit timelines are capped. Fees for smaller units are reduced. And Bay Area rental demand means your investment can pay for itself within five to seven years.

The first step is understanding what your specific garage and property allow. Every project starts with an honest assessment of the existing structure, local zoning rules, and your goals for the space.

Contact Custom Home to schedule a free site assessment and find out what your garage conversion will cost, how long it will take, and how much rental income you can expect.