How Much Does An ADU Cost?
You won’t be able to get an estimate until you have design concepts. But that doesn’t mean you can’t start planning your budget.
Are you considering building and financing an Accessory Dwelling Unit (ADU) in California? Join the club. Homeowners across the state are eyeing the prospect of building a second unit on their property, and plenty of others are moving forward on their project. ADUs are popular because they meet important core lifestyle needs for families. The primary motivations to build ADUs are financial and space.
ADUs make financial sense because they pay themselves off through passive income. If you build an ADU and rent it out, it will pay itself back (payback period depends on project cost and local rental market - see below for a detailed breakout on ADU payback periods).
ADUs also provide additional independent living space, which you can use for family members, friends, or tenants. Many people approaching retirement consider ADUs as an option to downsize but maintain independence and quality of life.
Regardless of why you are building an ADU, questions of cost are going to come up. If you are one of the lucky ones, you have enough cash on hand to pay for the project out of pocket. Otherwise, you should look into your ADU financing options.
Figuring Out ADU Costs
Next, you need to start thinking about the simple question - how much is this going to cost? You won't be able to get an estimate immediately. You need design concepts for contractors to provide projected costs, and they may not return your calls until you have those designs ready. You shouldn't expect to have a complete answer on costs until you have permitted your project.
However, that doesn't mean you have to be in the dark. There is plenty of information you can collect right now that will help you get a clear idea of what to expect. Though we can't provide estimates for your project's construction cost, we want to give you transparency on cost categories. Unexpected costs are never fun later on; it helps a ton to know what you are going to have to pay for well in advance. (No one likes it when car rental companies give you a teaser offer and throw unexpected fees at you when you show up to get the car).
Typical ADU Expenses
So let's dive in:
First, recognize that the costs of ADUs vary widely based on what you are trying to build. Converting an existing structure - usually a garage or a basement - is almost always less expensive than trying to create an attached or detached structure. Garage conversions can be as little as $40k, whereas new structures may cost as much as $200k if they include multiple stories. But it all depends on the specifics of your property and your personal goals - you need to go find out for yourself.
Next, let's talk about the specific expenses that you should expect to incur:
-Application fees: varies based on municipality. Find out by searching your city on Housable.com
-Permit fees: varies based on municipality. Find out by searching your city on Housable.com. Generally, if you're planning to build an ADU larger than 750 square feet, you can probably expect to pay some permit fees, but only in proportion to the primary home. You can also probably expect to pay school fees (ranges from $3 to $4 per square foot) but this may vary.
-Design: You must choose to work with an architect, or Housable's drafting team (note that architects are considerably more expensive). Learn the cost of your Housable design services (it varies per property) by verifying your property on the Housable site, and viewing your ADU services.
-Liability Insurance: Legally required in disaster-prone California
-Contractor Fees: You can connect with a contractor and get estimates on the Housable marketplace.
-Construction Fees: Equipment Rentals and environmental fees
-Furnishing and Decoration
The point is that we need to focus on costs throughout the entire ADU process. There is no point in ignoring the costs that will inevitably arise towards the end. Start to budget for them now, so you can begin to develop a realistic estimate of total project costs.
Remember - no estimate without design concepts.
Finally, remember that an ADU will take a significant amount of time and energy. How much is that worth to you?
The Road Ahead
The bottom line is that ADUs make financial sense to build. The home appreciation and passive income create payback periods that eventually generate a positive return.
Costs and financing can be challenging, but remember that you are in this for the long haul. You are investing in your family's financial future and creating space that may be very important to your loved ones or other people in your community.
You will get financed if you are persistent. Get as clear as possible on what you want to build, and do as much research as possible to fill in the gaps. The more information you have, the better.
Housable is here to support you throughout the process. If you have any questions, please schedule a free ADU consultation at 415-300-2387.
Are you interested in building an ADU on your property? Visit our website and check whether your property is eligible to build an ADU