How Much Does it Cost to Build an ADU?

Last Updated on May 20, 2024
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

Adding an accessory dwelling unit (ADU) provides homeowners with extra living space or potential rental income right on their own property. But what exactly impacts the costs behind constructing these flexible secondary units?

This guide examines the pricing breakdown of key construction components, cost-saving tips, size and design considerations, the impact of location, financing options, and strategies for maximizing your return on investment. Let’s start by looking at the different ADU configurations.

How Much Does it Cost to Build an ADU?

On average, expect to spend $150,000 to $300,000+ to build a new detached ADU or $50,000 to $200,000 to convert existing space. Costs typically run $200 to $350 per square foot depending on size, materials, level of customization, the need for new utility connections, permit complexity, and local labor rates.

Detached ADUs

• Built from the ground up in the backyard – most expensive option
• Cost: $150,000 to $300,000+

Garage Conversions

• Renovate existing garage into an ADU – most affordable option
• Cost: $50,000 to $150,000

Basement ADUs

• Finish all or part of an existing basement into an ADU
• Cost: $80,000 to $150,000

Attached ADUs

• Add an addition onto an existing home like a mother-in-law suite
• Cost: $100,000 to $250,000

According to the Accessory Dwellings website, the average cost to build an ADU in the US is around $200,000. The article highlights that the cost can range from $50,000 for a simple conversion to $350,000 for a high-end detached ADU. The website also provides a breakdown of the costs, including $30,000 to $60,000 for the foundation and framing, $20,000 to $50,000 for plumbing and electrical work, and $20,000 to $60,000 for finishes and fixtures.

The Cottage Company website offers insights into the cost of building an ADU in Seattle, Washington. The article states that the average cost to build an ADU in Seattle ranges from $200,000 to $350,000. The website also mentions that the cost can be higher in certain neighborhoods due to zoning restrictions and additional permitting requirements.

The Maxable website provides a cost calculator for building an ADU in California. According to the calculator, the average cost to build an ADU in California ranges from $150,000 to $350,000. The website also offers a breakdown of the costs, including $50,000 to $100,000 for the foundation and framing, $30,000 to $60,000 for plumbing and electrical work, and $30,000 to $80,000 for finishes and fixtures.

Now let’s break down the typical costs by construction phase.

ADU Construction Cost Breakdown

Design, Permits and Fees

• Architectural Plans: $5,000 to $15,000
• Permit Fees: $1,000 to $10,000

Site Preparation

• Grading, Excavation: $5,000 to $25,000
• Demolition for Conversions: $2,000 to $10,000

Foundation and Framing

• Concrete Slab or Footings: $15,000 to $50,000
• Wood or Steel Framing: $15,000 to $40,000

Roofing

• Shingle, Metal, or Flat Roofing: $10,000 to $30,000

Plumbing

• Kitchen and Bath Plumbing: $10,000 to $25,000
• Utility Connections: $5,000 to $15,000

HVAC and Electrical

• Mini-Split System: $5,000 to $15,000
• Electrical and Lighting: $10,000 to $25,000

Finishes and Fixtures

• Insulation, Drywall, Trim: $15,000 to $40,000
• Cabinets, Counters, Appliances: $20,000 to $60,000

Contractor Profit Margin

• 10% to 20% of Total Costs

Total Turnkey Cost

• $100,000 to $300,000+ on Average

Now let’s look at ways to control pricing.

Controlling ADU Construction Costs

• Choose an efficient footprint to minimize materials and excavation needs
• Opt for above-garage or basement units when feasible to leverage existing infrastructure
• Use affordable siding like LP SmartSide instead of costly brick, stucco, or stone
• Install mini-split ductless HVAC systems rather than expensive ductwork
• Seek rebates from utilities and ENERGY STAR on efficient appliances and fixtures
• Compare bids from several contractors to find the best rates
• Use modular kitchen, bath, and closet components to reduce labor
• Limit design changes and additions during construction to avoid budget overruns

Careful design and planning are very important to controlling expenses. Now let’s examine the impact of size and customization.

You might also like our articles about the cost of building a shouse, yurt, or smart cottage.

How ADU Size and Level Impact Costs

Smaller Units Under 500 sq ft

• More limited layout options and functionality
• Difficult to realize rental income potential
• Per square foot cost is highest

500-1000 sq ft Mid-Sized Units

• Balance livability with cost efficiency
• Easier to rent out at profitable rates
• Per square foot cost is lowest

Larger Units Over 1,000 sq ft

• Provide the most spacious and luxurious ADU
• Much higher upfront construction costs
• Increased rental income potential

Basic Finishes and Appliances

• Minimize costs but reduce appeal for high rents

Premium Finishes and Appliances

• Maximize luxury and rent potential
• Significantly increase upfront costs with diminishing returns

Carefully size and customize ADUs based on your budget, goals, and target rental rates.

Location, Zoning, and Local Regulations

Urban vs Suburban/Rural Areas

• Labor, materials, permits all cost more in cities
• Higher rents help offset increased costs

ADU-Friendly Zoning

• Streamlined approval reduces hassles
• Certain areas subsidize utility connections

Strict Regulations

• Complex permitting raises costs through delays
• Utility connection restrictions increase budgets

Contractor Availability

• Limited labor pool leads to higher bids and longer timelines

Research local costs, zoning laws, and regulations thoroughly before budgeting.

Financing Options

Cash or Home Equity

• Avoid financing costs but tied up capital

Home Improvement Loans

• Interest rates around 5-7%
• Require good credit

Cash-Out Mortgage Refinancing

• Tax deductible but higher total interest paid

401k/IRA Loans

• Interest costs but no credit check

Home Equity Line of Credit (HELOC)

• Variable interest rates but flexible draw down

Weigh financing terms and tradeoffs carefully based on your situation.

Tips for Maximizing ROI

• Add premium finishes and features if your target rental rates justify the upfront splurge
• Remodel garage spaces first before undertaking more expensive new construction
• Size the ADU appropriately to maximize potential rental income
• Create flexible multi-purpose spaces like a home office/guest room
• Ensure adequate soundproofing between the ADU and main home
• Include smart home technology and energy efficient appliances that add value

By making strategic design choices, your ADU can pay dividends for years to come through added equity, revenues, and enjoyment.

Permitting and Inspections Process

• Research zoning laws and design considerations upfront before finalizing plans
• Hire an architect familiar with ADU allowances to optimize the design
• Apply for all required permits and book inspections well in advance to avoid delays
• Post approved permits visibly on site and ensure proper setbacks are followed
• Complete all required final inspections for certificate of occupancy before occupancy

Following zoning and inspection protocols avoids missteps that increase costs.

Final Words

Adding an ADU provides homeowners with flexible additional living space that can also generate rental income when designed with the target tenants in mind. While construction costs may exceed $250,000 for larger detached units with premium finishes, garage conversions can cost half as much.

Careful budgeting, sizing, and local compliance help contain expenses to maximize your ADU’s ROI for years to come.

Frequently Asked Questions

How much does it cost to build an ADU over an existing garage?

Converting the space above a garage into an ADU typically costs $100-$150 per sq ft. Total costs for a 1,000 sq ft ADU over a garage often range from $120,000-$180,000. Leveraging the existing structure saves significantly on foundation costs.

What’s a typical price range to convert an existing garage into an ADU?

Garage conversions generally run $50-$150 per sq ft with most homeowners spending $75,000-$150,000 total. The pre-built foundation and roof reduce major construction costs compared to new detached ADUs requiring full-scale framing, excavation, and utilities.

How much should I budget for a basic 2 bedroom, 1 bath ADU?

A 750-1000 sq ft 2 bed 1 bath detached ADU will usually fall in the $150,000-$250,000 range depending on location, finishes, and the complexity of connecting to utilities. Simpler finishes and compact layouts help keep costs down for a basic 2 bed ADU.