How Much Does Building an Accessory Dwelling Unit Cost?

For property owners in the Bay Area, adding an accessory dwelling unit (ADU) to their property should be a no brainer. It not only allows owners to increase the value of their property, but potentially generate additional income if used as a rental property. But how much does adding an ADU cost? Today we’ll take a look at a variety of factors that will impact the cost of an accessory dwelling unit project. 

The Type of ADU

The most significant determining factor in accessory dwelling unit cost is the cost of construction. This varies widely based on the type of ADU you are looking to build. Projects that convert a pre-existing space (such as a garage, basement, or storage area) into a liveable unit will generally have lower construction costs than projects that involve building a new structure from the ground up. That said, conversion projects usually have higher initial costs to determine if the space is truly feasible for an ADU since there are specific code requirements for habitable units that not all spaces meet. Construction costs can quickly creep up for conversion projects that require major modifications like lowering a floor or raising a building. 

According to the City of Oakland’s ADU Guidebook, construction costs for converting part of an existing single-family home into an ADU ranged from $50 to $250 per square foot between mid-2017 and mid-2019. This range increased to $300 to $650 per square foot for converting an existing accessory structure (such as a garage or shed). Meanwhile, a new detached unit ranged from $300 to $500 per square foot. Conducting a feasibility study is a great way to get a handle on the type and complexity of your project before getting too far along in the process.

The Construction Method

If you are considering a new detached unit, your accessory dwelling unit costs will also depend on whether you plan on using a traditional stick-built method or going with a prefabricated unit. Prefabricated solutions may offer an opportunity for cost savings as they have already been designed and often benefit from manufacturing efficiencies. However, they are not feasible for many types of properties. In particular, multifamily properties or properties in densely populated areas often do not have adequate space or clearance for a prefabricated unit to be installed. While costs may be slightly higher, stick-built methods offer a much greater level of customization and are thus still preferred by many. Costs for either method can fluctuate based on market factors such as demand for skilled labor and raw materials.  

The Size of ADU

The size of the ADU itself will also influence the cost, not only because construction cost is often based on square feet, but because California state law does not allow local jurisdictions to charge impact fees on ADUs under 750 square feet. Impact fees are one of the ways that cities account for the increased density created by an ADU and the increased strain on infrastructure. They vary jurisdiction by jurisdiction, but keeping an ADU below 750 square feet can offer cost savings in the tens of thousands of dollars in some locations.

Permits and Other Planning Costs

Before construction can begin, you will need to apply for the required permits from your local jurisdiction. For an accessory dwelling unit, this usually involves submitting an application with a detailed set of plans. While using a licensed architect to assist with this step is not required for all types of properties, it is highly recommended to get timely approval and provide your local jurisdiction with an accurate picture of the project. Depending on other characteristics of your property, your local jurisdiction may require the involvement of a structural or soils engineer during this phase as well. Permit fees are usually determined as a percentage of the proposed project cost. Some local jurisdictions publish their fee schedules online. Typically, your licensed contractor will be the one to apply for the permits. 

Utility Upgrades

Depending on the age and condition of the primary dwelling, various utility upgrades may be required to adequately serve the new ADU. This most often involves upgrading the electrical service, but could also involve water, gas, or sewer lateral upgrades. 

Conclusion

Adding an ADU property to your home can be a great way to increase its value, earn extra income, or even provide housing for elderly family members or adult children. Determining your accessory dwelling unit costs ahead of time with proper planning will help to make the process smooth and successful. At Edrington and Associates we provide an ADU  feasibility study so that you can get a handle on the scope of your project before getting too far along. Our decades of experience in the Bay Area are at your disposal to help you create the ideal ADU for your property.