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[Editors’s note: this post was written in 2014. All the ideas still apply, but numbers may be out of date.]
Talk with a few contractors or review case studies on this website, and you might understandably be perplexed by the huge range of construction costs. Check out these cost ranges:
$9,000-$300,000 (mean is $98,000)
$13 – $438 per square foot (mean is $151/sf)
$3,500-$200,000 (mean is $52,000)
$6 – $308/sf (mean is $82)
Source: Martin Brown’s analysis of data from an Oregon DEQ survey of ADUs.
As a contractor and developer who has built new ADUs and converted existing structures into ADUs (through my company, Orange Splot LLC), I often get asked for ballpark ADU cost estimates. This post won’t offer the short, crisp answer folks are usually looking for. But I hope it at least offers some perspective on the wide range of ADU costs and provides a path towards a realistic cost estimate.
Construction vs. Development budgets
The development budget includes all the costs required to design, permit, finance, and build an ADU. Construction is usually the largest expense in a development budget, but never the only one. Non-construction development costs include:
If you’re putting together an ADU project budget, make sure to research and quantify these costs too. They may be smaller than construction costs, but they’re no less real.
Interpreting cost data
Q: “How much did that ADU cost?” A: “$120,000”
If this is all the information you have, there’s no way to tell if $120,000 is the construction cost or the full development cost. General contractors are more likely to quote the construction cost, because that’s the size of their contract and they’re unlikely to know about other costs involved. An owner is more likely to quote the full development cost, since they have to write all the checks. Either number can be useful, but it’s important to know which one you’re getting. If it’s not clear, ask!
Why is the cost range for ADUs so dramatic, even on a square foot basis?
(1) ADUs can be created in multiple ways, including the following. These are listed in rough order of increasing cost per square foot:
Note: Not all of these options are available in all jurisdictions. Check local codes!
(2) ADUs are built to very different construction standards. Some are built like cigar box guitars, designed to provide serviceable housing within a tight budget. They may be partially or completely DIY. Others are built more like violins, by experts sparing no expense to create beautiful, custom little dream homes for someone (often the builder) to live out the rest of their days. A high end kitchen remodel can easily cost more than double the cost of an Ikea kitchen of the same size; the same holds true for ADUs.
(3) Due to their relatively small size and inevitable location right next to a primary dwelling where the owner often lives, it’s tempting for handy owners to self-perform some or all of the construction work. This can decrease out-of-pocket costs, which sometimes results in under-reporting of an ADU’s full construction cost. An owner might remember to track material purchases but not factor in their own labor associated with buying or installing them, not to mention the cost a contractor would have included for overhead & profit for that portion of the job.
Do ADUs typically cost more per square foot than full sized homes?
Yes, for several reasons:
So how do you estimate construction costs?
Over the course of an ADU project, there will be a few rounds of cost estimates. These iterative pricing rounds help the owner make an informed decision at each stage of development on whether to proceed forward, adjust the design or scope to try and bring it within budget, or cut losses and drop the idea all-together.
Right at the beginning, it makes sense to try and get a very rough cost estimate with as little work or expense as possible. Hopefully, results will be encouraging and you can shift from dreaming & scheming to designing & building your ADU. But if they’re not, you will have avoided wasting your own time (and likely other peoples’ time) on a project that isn’t financially feasible.
Since there’s no universal answer to the cost question, here are some steps to get over that initial cost estimating hump:
Step 1: Regulations and existing conditions
Read what your local zoning code has to say about ADUs (usually just 1-3 pages), along with any on-line pamphlet your jurisdiction may offer to help understand the rules. Zoning codes aren’t the most exciting things to read, but they’re really important because they answer questions with potentially large impacts on cost and basic feasibility, such as: Would an additional parking space be required? Does your jurisdiction allow the type (ie. internal or detached) ADU you’re hoping to build? Is there enough ceiling height in the basement or attic to convert it to an ADU without making expensive modifications? Does the ADU need to match the exterior appearance of the primary dwelling? Does the city require a preliminary inspection and walk-through for a prospective ADU? If after a little studying it’s unclear how the code would apply to your particular situation, it’s probably worth a trip to the local planning department for clarification.
You don’t have to do this work all by yourself, although it’s usually not all that hard. Another approach is to contract with an architect or project manager familiar with local regulations to help assess basic project feasibility. That will cost some $ early on, but might help avoid expensive surprises down the line.
Also note existing conditions of the property that may have significant cost impacts. Is there a steep slope that would require a big (expensive) retaining wall? Is the concrete footing holding up that garage you want to convert into an ADU crumbling and in need of replacement? Will it be easy or complicated/disruptive to tie in to existing water and sewer lines?
With these basic questions answered, you’ll be much less likely to spend a lot of time scoping out a project that can’t be built – or missing a significant cost (ie. creating a new parking space, if required), that could blow an otherwise feasible project budget.
Step 2: Scope and Finish
Sketch out your vision for the ADU.
Step 3: Preliminary Cost Estimate
Now you’re ready to start working on a rough cost estimate. The key is to track down cost data from comparable projects as similar as possible to the one you’re scheming using some combination of the following techniques:
Beyond the initial estimate
With a rough idea for how much a proposed ADU will cost, it’s time to get serious about how to pay for it and to make a “Go”/”No Go” decision on whether to proceed. If it’s a “Go” you can bring on a designer and/or general contractor to start fleshing out the ADU design and scope. With the project becoming more real, participants in the process should be more willing to invest the time and effort it takes to prepare increasingly accurate cost estimates. And these interim estimates can be critical in preventing cigar box guitars from morphing unexpectedly into Stradivarius violins that never get built.
We’ll wrap up this post with a quick summary of costs for ADUs profiled on this website. If you find one similar to what you’re planning, that could provide a very rough initial estimate.
Good luck with the project!
|Name||Square footage||Type||Year built||Development Cost||Dev Cost / SF||Notes:|
|Stephanie & Sam Dyer’s ADU||342||Detached new construction||2012||110,000||322|
|Joe Wachunas & Naomi Cole’s ADU: Reworking the garage||375||Garage conversion||2012||45,000||120||Costs exclude owner sweat equity|
|Derin & Andra William’s ADU: An Energy-Efficient Basement Apartment||650||Basement conversion||2012||60,000||92||Costs exclude owner sweat equity|
|Lesa Dixon-Gray’s ADU: Putting Mom in a Home, Sweet Home||590||Detached new construction||2011||110,000||186|
|Carolyn Matthews & Bruce Nelson’s Granny’s Garden Cottage||640||Detached new construction||2006||260,000||406|
|John Baker’s ADU: Renting the Basement for 37 Years||800||Basement conversion||1985||30,000||38||Significant sweat equity over 7 year renovation period|
|Martha Metzger’s ADU: Rent Now, Move in Someday||642||Detached new construction||2011||200,000||312|
|Michael Klepinger’s ADU: Ellen Basset’s Garden Cottage||660||Detached new construction||2012||125,000||189|
|Jeff McCaffrey & Beth Bonness’s ADU Hawthorne Guesthouse||700||Addition above new detached garage||2007||250,000||357|
|Wally & Lara Jones’ ADU: Keeping Good Neighbors||800||Basement conversion||2012||85,000||106||Costs exclude owner sweat equity|
|Lissa & Matt’s ADU: Planning for Our Son’s Future||375||Addition above new detached garage||2011||30,000||80||Incremental cost beyond base garage cost|
|Stephen William’s ADU: An ADU on the Alley||673||Detached new construction||2012||125,000||186|
|Susan Moray’s ADU: Updating History in Ladd’s||550||Detached garage conversion||2013||90,000||164|
|Scott Powers’ ADU: 3 Generations at Home||800||Detached new construction||2011||150,000||188|
This is brilliant! But I can’t get the link to work! Sue
which link, Sue? I will try to fix it.
Hi, I am just bought a home in Santa Cruz and I am going to build an ADU. Do you have a good firm/person/architect that I can work with?
– firstname.lastname@example.org – Phil
Sorry, Phil, right now this site doesn’t have the resources to vet professionals. Perhaps someone else will see your query and chime in, though. We have been thinking about creating a way for professionals to list themselves, but it’s not ready for prime time yet. Stay tuned!
In doing some research for our detached ADU I spoke to our insurer. They weren’t aware of a way to cover our ADU if we chose to rent it out. Thoughts? He said it might be possible if the main house and ADU had separate addresses but I haven’t seen insurance or address changes covered here. Can someone who has an ADU in Portland advise how they handle insurance coverage?
It should just be considered a second unit from the perspective of an insurance company (e.g. a duplex). We haven’t heard of challenges getting ADUs covered, so you might want to just call up a couple other carriers for quotes. For one of our editors, their Farmer’s policy on the primary home was expanded to cover the newly-built detached ADU for an additional cost of ~$500/yr.
Hasn’t been any problem with my insurance company (Amica). I just told them it was a permitted ADU and it had increased the value of the property. The policy was adjusted accordingly. Could be your insurance company just doesn’t understand what an ADU is. I haven’t heard of anyone else having this particular problem. (Note if you plan to use your ADU as a SHORT-term rental you may want additional liability insurance.)
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