ADU Rental Income in Denver: Rates, Costs, and ROI (2026)
What Denver homeowners actually earn renting an ADU — 2026 rent ranges by neighborhood, what a Denver ADU costs to build, cap rates, and the zoning rules that make it possible.
How Much Does an ADU Rent for in Denver?
Denver is one of the strongest ADU rental markets in Colorado — a large renter population, a 2021 zoning update that opened ADUs to most residential lots citywide, and rents that have kept climbing even as construction costs stabilized.
Denver ADU rental rates (2026):
| ADU Type | Monthly Rent | Annual Gross Income |
|---|---|---|
| Studio / 1 Bedroom | $1,500–$2,200/mo | $18,000–$26,400 |
| 2 Bedroom | $1,900–$2,800/mo | $22,800–$33,600 |
These figures track closely with what we publish in the full ADU rental income guide and power the Denver defaults in our ADU ROI Calculator.
What an ADU Costs to Build in Denver
Denver's price range is wide because it depends heavily on whether you're converting existing space or building new:
- Garage conversion: $130,000–$180,000 — reuses the existing structure and foundation
- New detached ADU: $200,000–$300,000 — full new construction, higher-end finishes push toward the top
Averaged across project types, Denver detached ADUs typically land around $170,000–$270,000, per our Q3 2026 cost report. Run your own numbers with the ADU cost calculator.
Denver ADU Cap Rates and Break-Even
Example: Denver 1BR ADU ROI
- Project cost: $200,000 (new detached, 500 sq ft)
- Monthly rent: $1,850 (mid-range)
- Annual net income (after 10% expenses for vacancy, maintenance, and management): $19,980
- Cap rate: ~10% — break-even: roughly 10 years
Across Denver as a whole, ADUs generally run 8–11% cap rates with an 8–14 year break-even, in line with the rest of Colorado's fastest-growing markets. Garage conversions break even faster since there's no foundation or framing cost to recover.
Model your specific address, rent estimate, and financing with the Colorado ROI Calculator — it's pre-loaded with Denver, Boulder, Fort Collins, and Colorado Springs benchmarks so you can compare markets directly.
Denver ADU Zoning and Permitting
Denver made ADUs easier to build than in most Colorado cities:
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- Zoning: Denver's 2021 zoning code update (Denver Zoning Code, Article 3) allows ADUs on most residential lots citywide — you no longer need a case-by-case rezoning.
- Size limit: up to 1,000 sq ft, or 50% of the primary dwelling's floor area, whichever is smaller.
- Setbacks: 5 ft rear setback is standard; check your specific zone district for side setbacks.
- Pre-approved plans: Denver offers a pre-application review service and pre-approved ADU plan sets, which shortens permitting compared to a fully custom design.
- Statewide backstop: Colorado's HB 1152 (2024) requires most municipalities statewide to allow at least one ADU per single-family lot and bars owner-occupancy requirements — so Denver's local rules can't be rolled back below that floor.
Full detail on Colorado's statewide law, including sources, is in our Colorado ADU laws guide.
How Denver Compares to Other Colorado Markets
| Market | 1BR Rent | 2BR Rent | Typical Build Cost |
|---|---|---|---|
| Denver | $1,500–$2,200/mo | $1,900–$2,800/mo | $170K–$270K |
| Boulder | $1,700–$2,600/mo | $2,200–$3,200/mo | $190K–$300K |
| Fort Collins | $1,200–$1,800/mo | $1,500–$2,200/mo | $150K–$240K |
| Colorado Springs | $1,000–$1,500/mo | $1,300–$1,900/mo | $130K–$210K |
Boulder commands the highest rents in the state thanks to the university and tech sector, but construction costs are also the highest, so cap rates land in a similar range to Denver. Colorado Springs and Fort Collins are cheaper to build in and correspondingly cheaper to rent.
Find a Denver ADU Builder
Our contractor directory lists licensed ADU builders, designers, and architects working in the Denver metro — filter by service type to find garage-conversion specialists versus new-construction builders.
Frequently Asked Questions
How much can I earn renting an ADU in Denver?
Most Denver ADU owners see $1,500–$2,800/month depending on size and neighborhood, or $18,000–$33,600/year in gross rental income. Net income after typical expenses (vacancy, maintenance, property management) runs about 85–90% of gross.
Is building an ADU in Denver worth it?
For most owners, yes — Denver ADUs typically achieve 8–11% cap rates with an 8–14 year break-even, which beats most other real estate investments available to a homeowner without buying a second property. The math is strongest when you rent long-term rather than build to flip; see our guide on whether ADUs increase property value for the resale side of that comparison.
Do I need a permit to build an ADU in Denver?
Yes. Denver requires a building permit, and most lots are now allowed ADUs by-right under the 2021 zoning update, so the process is a standard permit review rather than a rezoning case. Denver's pre-approved plan sets can shorten this significantly if your project fits one of the standard designs.
What's the cheapest way to add rental income with an ADU in Denver?
A garage conversion, typically $130,000–$180,000 in Denver — it reuses the existing foundation, framing, and roof, cutting cost by roughly 40% versus new detached construction. See our garage conversion ADU guide for the full breakdown.