What Does An ADU Cost?

An Accessory Dwelling Unit (ADU), such as a carriage house, backyard cottage, guest house, apartment, in-law suite, or granny flat,  is a secondary, independent, living space built on the property of an existing single-family home. They are smaller, independent second dwellings on a single-family lot that typically have a kitchen, bathroom, sleeping area or bedroom, and living space. Converting portions of homes into private apartment spaces or constructing standalone backyard bungalows allows homeowners to comfortably house family members, accommodate multigenerational living, or generate rental income. Their compact footprints, reduced permitting restrictions, and lower construction costs relative to primary dwellings offer homeowners creative opportunities to maximize land use. Intelligently designed ADUs also increase property values while assimilating into the aesthetics and form of surrounding neighborhoods. Today we’ll review the cost of building an ADU.

Understanding The Costs

The cost of building an ADU depends primarily on the overall unit size, location, and customization level. ADUs generally range from $60,000 to $225,000 depending on the level of finishes and appliance upgrades selected. Larger, more elaborate ADUs with high-end fixtures and detailing can exceed $300,000. Each ADU is customized, so it’s nearly impossible to give a general estimated cost without looking at all variables. 

An ADU budget comprises both hard and soft costs. Hard costs encompass actual construction materials and labor, usually representing 70-80% of the total. These include lumber, concrete, roofing, windows, drywall, paints, cabinets/countertops, flooring, plumbing and electrical supplies, appliances, plus payments to general contractors and tradespeople installing them. Soft costs account for the remaining 20-30%. These fees cover project management, architectural drawings, structural engineering consults, permitting applications, surveys, utility upgrades, impact fees, and essential site work such as grading, excavation, and demolition. 

Breaking Down Expenses

Many factors affect the cost of an ADU. Some of them are as follows:

• Type: There are attached ADUs, detached ADUs, and conversion ADUs available. The type of ADU you choose can affect the price of construction.
  
  
• Size: Smaller ADUs will be less expensive overall than larger ones.
  
  
• Location: Projects in urban areas tend to cost more for permits, labor, and materials. Site prep may be needed to level the ground or clear trees.
  
  
• Materials: The cost of materials can vary widely depending on the current market conditions, location, type of materials, and grade of materials.
  
  
• Finishing & Amenities: High-end appliances, finishes, and custom features increase costs. The more customization there is, the more likely it will cost.
  
  
• Foundation: Attached ADUs that utilize the existing home's foundation are cheaper. New detached buildings require a new foundation.
  
  
• Systems: The installation of electrical, HVAC, and plumbing systems can vary depending on systems already in place if new connections need to be installed, and meeting local building codes.
  
  
• Labor: Hiring professional contractors and subcontractors to build the ADU may cost more upfront, but guarantee a construction that is safe, sturdy, and up to code.
  
  
• Permits: Fees for plans, permits, and utilities depend on the location of the home and where the ADU will be built. 

Carefully tracking expenses in major categories and understanding allowable regional subsidies can help homeowners stay on budget.

Return On Investment

ADUs have emerged as an appealing and eco-friendly housing option. By leveraging unused spaces on existing properties, ADUs allow homeowners to create independent living quarters at a fraction of the cost and resources needed to build full-sized homes. Their petite footprints not only reduce construction costs but also yield ongoing savings from lower utility bills. Beyond housing family members or guests, ADUs can provide homeowners with a stream of rental income when leased out to tenants. Well-designed units blend seamlessly into the look and scale of the surrounding property to preserve the aesthetics and privacy of a single-family dwelling. Thanks to their affordability, flexible usage, and sustainability, ADUs are an increasingly popular choice among homeowners looking to add value and functionality to their premises without undertaking exorbitant new additions. The rewards and potential uses of ADUs are as unique as the dwellings themselves.

Constructing an ADU not only provides extra living space but also offers multiple avenues for financial gain down the road. ADUs unlocked for full-time rental can generate monthly passive income. This steady cash flow combined with increased tax deductions for property expenses and depreciation often offsets the original ADU investment. Additionally, adding an ADU typically boosts the resale value of the entire property by 10-30%, especially when located in desirable school districts. This translates into recouping 50-75% of total ADU construction costs at the time of sale. 

ADUs also empower homeowners to comfortably house college-bound teens, elderly parents, or boomerang adult children. Whether supplementing income, planning for multigenerational living, or boosting future home equity, ADUs yield dividends offering security and peace of mind. It is a one-time upfront investment that not only provides a comfortable, custom place for family members, friends, tenants, or even yourself but also adds a valuable asset to the property. 

Frequently Asked Questions

Can I finance an ADU?

Yes, there are several options to finance an ADU build. The most common methods are cash, home equity loans, lines of credit, cash-out mortgage refinancing, and construction loans. Makara ADU offers in-house financing so everything can be handled in one place. A Makara ADU specialist can advise on current financing options and help homeowners find lending partners tailored to their budget needs.

How can I save on my ADU build?

Using pre-approved ADU floorplans from an experienced designer provides upfront savings on architecture fees and expedites the permitting process. Their established supply chain also enables bulk pricing discounts on windows, doors, fixtures, and other materials. Homeowners can save thousands in change orders by choosing from customizable design catalogs versus fully custom builds. Opting for lower-cost flooring, finishes, and amenities can also save thousands. Working with an experienced ADU contractor like Makara ADU can help you find ways to save money and stay on budget.

What is the most affordable ADU?

Converting existing household spaces like garages, attics, or basements into accessory units can cost far less than new construction since the shell structure and roof already exist. Adaptive reuse of available infrastructure minimizing structural changes nets the most cost-effective backyard units, maximizing value. Additionally, the smaller the build, the less it will cost to create. 

When weighed against the ongoing returns, building an ADU represents a valuable investment in your property’s future. Though upfront costs can seem daunting, the potential for added rental income, accommodating multi-generational living, and boosting property values down the road offset the initial outlay. Careful planning and budgeting to control square footage, customize amenities to your needs, and finance through appropriate lending tools are key to realizing cost savings. Partnering with an experienced ADU builder like Makara ADU streamlines design, material procurement, and construction to provide the most home for your dollar. Regardless of your reason for adding an ADU, the long-term benefits for you, your family, and potential tenants are clear. Adding an ADU can yield financial security, greater functionality, and flexible space primed to suit your needs for years to come.