How to Plan HVAC for an ADU or Rental Unit

Adding an ADU (Accessory Dwelling Unit) or rental unit? HVAC is one of your biggest decisions - and the wrong choice can cost you thousands or create tenant headaches.

Here's everything Bay Area landlords and homeowners need to know.

Your Three Main Options

Option 1: Ductless Mini-Split System

Option 2: Small Ducted Heat Pump

Option 3: Extend Existing Central System

Option 1: Ductless Mini-Split (BEST for Most ADUs)

How It Works

• Wall-mounted indoor unit(s)
• Compact outdoor compressor
• Refrigerant lines run through small hole in wall
• No ductwork needed

Pros for ADUs:

✓ Easiest installation (no ductwork, minimal construction) ✓ Lowest cost: $3,500-6,000 installed ✓ Separate metering (tenant pays their own electricity) ✓ Independent control (no affecting main house) ✓ Very efficient (20+ SEER² heating + cooling) ✓ Perfect for small spaces (300-800 sq ft) ✓ Quiet operation ✓ Fast install (1-2 days)

Cons:

✗ Indoor unit visible on wall (some don't like the look) ✗ Limited to 1-3 rooms ✗ Requires outdoor space for compressor ✗ Tenant controls temperature (can't limit)

Best For:

• Garage conversions
• Backyard studios
• Small cottages (under 800 sq ft)
• Landlords wanting separate utilities
• Quick turnaround projects

Cost Breakdown:

• Single-zone (1 room): $3,500-5,000
• Multi-zone (2-3 rooms): $5,500-8,000
• Installation: 1-2 days
• ROI: Pays for itself in rental income within 6-12 months

Option 2: Small Ducted Heat Pump

How It Works

• Traditional ducted system (miniature version)
• Small air handler in closet/attic
• Compact outdoor unit
• Ducts run through walls/attic

Pros:

✓ Hidden system (no wall units visible) ✓ Better air distribution (every room) ✓ Traditional look and feel ✓ Separate metering possible ✓ High efficiency options available

Cons:

✗ Higher cost: $6,000-10,000 ✗ Requires ductwork space (attic, crawlspace, or walls) ✗ Longer installation (3-5 days) ✗ Not ideal for tiny spaces (under 400 sq ft) ✗ More complex (more potential maintenance)

Best For:

• Larger ADUs (800-1,200 sq ft)
• New construction (ductwork easier to install)
• Multi-room units (2+ bedrooms)
• Premium rentals (tenants expect central HVAC)

Cost Breakdown:

• Equipment: $4,000-6,000
• Ductwork: $2,000-4,000
• Installation: $1,500-2,500
• Total: $7,500-12,000

Option 3: Extend Existing Central System

How It Works

• Add ducts from main house system to ADU
• Share heating/cooling with primary residence
• One thermostat or zone controls

Pros:

✓ Lowest equipment cost (use existing system) ✓ Single utility bill ✓ Familiar setup

Cons:

✗ Main system may be undersized for additional space ✗ Shared utility (can't bill tenant separately) ✗ Tenant affects main house temperature ✗ Longer duct runs = efficiency loss ✗ Zoning issues (one space always too hot/cold) ✗ Potential code violations (many cities prohibit)

Best For:

• In-law suites (attached to main house)
• Family use only (not rental)
• Very small additions (under 300 sq ft)

Why We Don't Recommend for Rentals:

⚠️ Utility disputes with tenants ⚠️ Comfort complaints ⚠️ System overload issues ⚠️ Code compliance problems

Bay Area Considerations

City Requirements

Check your local requirements:

• San Francisco: Usually requires separate HVAC
• Oakland: Separate systems strongly preferred
• Berkeley: Must comply with energy codes
• San Jose: Varies by permit type

Always verify with your building department.

Climate Considerations

Coastal areas (SF, Oakland, Berkeley):

• Mini-splits work perfectly (mild climate)
• May not need full heating capacity

Inland areas (Walnut Creek, Concord, Livermore):

• Consider heat pump with backup heat
• More extreme temps = need proper sizing

Space Constraints

Tight lots: Mini-split outdoor units are compact (2x2 feet) No outdoor space: Might need ducted with rooftop unit Attic access: Makes ducted systems easier

Landlord-Specific Considerations

Separate Metering (Highly Recommended)

Why it matters:

• Tenants pay their own utilities
• No disputes over energy use
• Incentivizes responsible use
• Easier rent pricing

Best options: Mini-split or small ducted with separate meter

Maintenance Responsibilities

Mini-Split:

• Landlord: Annual professional service
• Tenant: Monthly filter cleaning (easy, removable filter)
• Maintenance cost: $150-200/year

Small Ducted:

• Landlord: Annual service + filter changes
• Tenant: Thermostat operation only
• Maintenance cost: $200-300/year

Noise Considerations

Mini-split indoor unit: 20-30 dB (whisper-quiet) Small ducted: Nearly silent in living space Avoid: Noisy systems = tenant complaints

Access for Repairs

Plan for:

• Indoor unit accessible (not behind tenant furniture)
• Outdoor unit accessible (but secure)
• Clear maintenance access clause in lease

Cost vs. Rental Income Analysis

Example: 600 sq ft Oakland ADU

Mini-Split System: $5,000

• Monthly rent: $2,200
• Payback period: 2.3 months
• 10-year value: $264,000 rental income

Small Ducted: $9,000

• Monthly rent: $2,200 (same)
• Payback period: 4.1 months
• 10-year value: Same $264,000

Without HVAC:

• Monthly rent: $1,600 (25% less)
• Lost income: $600/month = $7,200/year

Bottom line: HVAC installation pays for itself in months.

Recommended Sizes by ADU Type

ADU Size	Recommended System	BTU/Tonnage
300-500 sq ft	Single-zone mini-split	9,000 BTU (0.75 ton)
500-700 sq ft	Single-zone mini-split	12,000 BTU (1 ton)
700-1,000 sq ft	2-zone mini-split or small ducted	18,000 BTU (1.5 ton)
1,000-1,200 sq ft	Small ducted	24,000 BTU (2 ton)

Rebates for ADU HVAC (2025)

Federal Tax Credit: 30% up to $2,000 TECH Clean California: $3,000-5,000 Local incentives: $500-1,500

Example savings:

• $5,000 mini-split
• -$1,500 federal credit
• -$3,000 TECH rebate
• Net cost: $500!

Galaxy's ADU Recommendations

For 80% of Bay Area ADUs: Ductless mini-split

• Fastest install
• Lowest cost
• Separate metering
• High efficiency
• Easy maintenance

For larger units (900+ sq ft): Small ducted system

• Better for multi-room layouts
• More traditional
• Hidden equipment

Avoid: Extending main house system

• Too many problems
• Tenant conflicts
• Code issues

What to Ask Your HVAC Contractor

1. Can this be separately metered?
2. What's the noise level inside the unit?
3. Who maintains filters - landlord or tenant?
4. What rebates apply?
5. How long will installation take?
6. Where will outdoor unit be located?
7. What warranty is included?

Permit & Inspection Tips

✓ HVAC usually included in ADU permit ✓ Separate electrical sub-panel recommended ✓ Energy code compliance required (Title 24) ✓ Mini-splits often easier to permit ✓ Allow 2-4 weeks for permitting

Ready to Add HVAC to Your ADU?

We specialize in ADU HVAC throughout the Bay Area. Fast installation, maximum rebates, and tenant-friendly systems.

Get ADU HVAC Quote | Call (925) 578-3293