How Much Does it Cost to Build an ADU?

Despite new laws allowing the splitting of homes into multi-unit buildings, homeowners have created fewer than 500 new homes using these new powers. Instead, people have started to investigate accessory dwelling units, or ADUs, to fulfill their need for new builds. However, how much does it cost to build an ADU, and what will you need to set aside for one of your own?

Although ADUs are a very cost-effective housing solution, there are many hidden costs, including California-specific regulations, local construction necessities, and permit processing.

The following guide will help you understand how much they cost so that you can start the planning process and put aside an investment into construction. So, ensure you equip yourself to:

• Make better financial decisions regarding your ADU

• Comply with building laws

• Avoid compromising quality

• Apply for financial support

Read on to ensure you have the resources to make your ADU dreams come true.

How Much Does it Cost to Build an ADU?

According to Yahoo News, in 2023, one in every five homes built in California was an ADU. One primary reason for this is the low per-square-foot cost of building them compared to more traditional housing. Despite this, they can still cost significant money to start erecting.

Size and Layout

While larger ADUs cost more to construct, the increase tends to shrink as the build grows.

For example, the City of Woodland reports that a detached ADU of around 308 square feet will cost up to $80,000 ($3.75k per square foot). On the other hand, one of 1,200 square feet will cost only $300,000 ($4k per square foot).

Also, consider the type of internal layout you want. In general, you want to create a space that is easy to move through, even for a multigenerational family. Fortunately, such open spaces reduce material and labor costs due to their fewer required walls.

Consider designing flexible rooms to help you create a more functional ADU without significantly increasing costs. If you develop combined offices and guest rooms or multifunctional kitchen/living rooms, for example, you can save on construction costs that would otherwise go toward creating more spaces.

Bear in mind that larger ADUs may also need to upgrade their utilities. These could include:

• Improved electrical panels

• Additional water pipes

• Extra waste removal

• Better Internet or other services

Each of these can add further to the costs or cause you to compromise somewhere in the ADU's design.

Regional Pricing

Depending on where you wish to build the ADU, you can expect to pay differing amounts for various elements, including:

• Labor costs

• Materials

• Permits

• Inspections

In general, urban areas such as LA and San Francisco are much more likely to have high labor costs. In contrast, rural areas might instead lead to higher material fees as transportation costs grow for harder-to-reach locations.

If you build closer to the coast, labor costs will be much higher due to demand in the area. In addition, architects and engineers in the city may demand higher pay for their work, leading to a heftier price tag.

If you decide to build your ADU closer to the coast or around other areas prone to damage from extreme weather, you should also ensure the ADU can stand up to more punishment, or the build may end up damaged or destroyed in strong wind. The weather-resistant materials you will need to ensure the ADU's safety may cost you significantly.

Another reason that the region you build in may cost you more is that urban areas tend to have stricter environmental laws. As such, both compliance expenses and extra fees for permits or other bureaucracy may end up costing you both time and money.

These permit fees vary city by city and can range from thousands to tens of thousands of dollars. However, in some areas, such as San Francisco, you may also need to pay for environmental compliance permits and inspections that you would need in other locations.

Design Complexity

Consider how complicated you will want to make any new build. Generally, simple and rectangular designs may be less aesthetically pleasing but are likely to save you a lot of money on material and labor. If you want multiple architectural features in your ADU, such as vaulted ceilings or custom finishes, expect to significantly increase your costs due to design and labor requirements.

At the same time, remember that if you wish to bring in high-end materials and furniture, such as those made of marble or handcrafted pieces, expect to pay a premium. They can often double or even triple the costs compared to standard options, with some examples of specialist materials being even more difficult to source.

Also, while energy-efficient upgrades might save you money in the long run, they will set you back significantly when first installed. Solar panels and batteries, for example, are significant investments, and their up-front costs can cause budgeting problems for many new construction projects.

Site Preparation and Code Compliance

In California, be aware of energy efficiency building codes. California's Title 24, for example, can add thousands of dollars to any construction to ensure you comply with local regulations.

Ensure you investigate ADU laws specifically, however, as some locales have simplified the permit and inspection processes. While costs often range from $500-$1000 per inspection, many cities have fast-track systems for ADU construction, helping you save on these costs.

Once you have all the paperwork in place, there is still more to do. Site preparation, such as leveling the terrain or inspecting the soil, can incur a range of costs. Ensure you perform enough research to understand the pros and cons of every option.

Understanding California ADU Regulations

ADU promotion group YIMBY recently reported that as many as 83,865 ADUs were built in the six years leading up to 2022, creating residences for people across the state. Many of these were made in good faith despite mistakes in building planning. To support these projects, California has established a build amnesty program to allow residents time to ensure their ADU follows all appropriate regulations.

Without this amnesty, however, it is essential to keep yourself appraised of local laws to prevent increased costs due to a lack of building permission.

Applications for Building

Before you place a single plank, you need to ensure you provide the local authorities with a:

• Planning permit

• Zoning permit

• Building permit

• Electrical and plumbing permit

In addition, some local jurisdictions may have specific permits they require before they will allow you to start building. Make sure you research your building location to ensure you secure the proper permissions, and work with a lawyer specializing in permits if you believe there will likely be difficulties securing one. Such a professional may require you to pay more money toward legal fees.

To ensure you secure a successful permit, you will need to include the right information to avoid ambiguity in your application. Collecting this will take you time and will usually entail bringing together:

• A completed permit application form

• Proof you own the property on which you wish to build the ADU

• Existing site plans

• Proposed ADU project plans

• Detailed construction plans

Applying will cost you a fee ranging from a few hundred dollars to several thousand, depending on the location. If you intend to build a larger structure, processing costs may also increase the fee.

Before building, be aware that state law gives cities 60 days to process the permit application and decide whether to deny it. However, to save time, you may wish to know that pre-approved permits exist, often leading to a much faster processing speed. For example, San Jose lists several ADU options you can use in that specific area to seek a speedier application.

Reduce ADU Costs Without Sacrificing Quality

If you worry that building an ADU will break the bank, several options are available to help you significantly reduce costs while maintaining quality. For example:

• Use standardized fixtures and avoid custom parts

• Limit high-end upgrades

• Leverage an easy-to-install pre-fabricated ADU design

• Buy materials locally to reduce transportation costs

• Use reclaimed wood and recycled materials to reduce construction costs

• Acquire materials in bulk if you are building multiple ADUs

• Obtain multiple quotes from several ADU construction firms

While California has previously offered grants for building ADUs, the state no longer offers this benefit. However, continue to watch local municipal news as they may open up the opportunity again at a later time. Instead, you may be able to find loans and subsidies that can help kickstart your building efforts through other sources.

Make Cost-Effective ADU Decisions

How much does it cost to build an ADU? Well, building an ADU in California is both a significant investment and a strong potential source of income. However, engaging in planning can offer solutions to California's affordable housing challenges.

For help saving money when building a California ADU and advice on grants and other financing options, check out the ADU Help Center. We can offer expert guidance and resources to ensure your project succeeds. Contact us today to get started on your construction plans and to simplify everything from costs to furnishing the build.