Most people are surprised when they hear the REAL cost to build an ADU (accessory dwelling unit). We come across articles all the time misstating the actual cost of building these mighty units from the ground up, some claiming you can build an ADU for as low as $20,000 (we wish!)
But, after helping over 300 homeowners build their ADUs, we want to help clear up those inconsistencies.
Cost Per Square Foot is Deceiving
Clients always want to know the average cost per square foot numbers for an ADU, but the truth is it’s not the best way to gauge the final cost of your project.
For starters, ADUs cost more per square foot than typical single-family homes for several reasons.
- There are fixed costs associated with permitting and design fees.
- Margins are smaller for general contractors, subs, and architects.
- ADUs require new foundations, new walls, plumbing, electric, heating and cooling, and a separate roof, just like a regular house.
- There are no economies of scale. You know how you get a significant discount if you buy groceries from Costco because you’re buying in bulk? Building a tiny house is the opposite.
- ADUs still require a bathroom and kitchen, which are ‘expensive’ square footage.
- Because the units are smaller the cost per square foot isn’t offset by extra bedrooms, large living rooms, and hallways you find in larger homes. This space is considered ‘cheaper’ square footage and brings the average cost per square foot down.
The cost per square foot of an ADU can differ dramatically depending on the size and structural form
- The larger the unit, the cheaper your cost per square foot will be. Detached units can be up to 1,200 square feet or larger if you’re converting an existing space. A 1,200 square foot unit will probably be cheaper per square foot to build than a 450 square foot unit.
- Building up is more expensive. Most people instinctively want to build an accessory dwelling unit above their garage. If your budget is tight, stick to single-story. Building up will add ~$50/square foot to your project.
- A garage conversion is the cheapest way to convert space into an ADU. If your budget is modest keep the existing envelope of the garage, meaning don’t expand on the current footprint. This will add extra cost.
Region Will Impact Your Final Cost
If you live in the San Diego, your final cost is going to greatly differ from the final cost for a project in the Bay Area. We’ve broken down everything you need to know below.
Suddenly, the $192,000 price tag seems a lot more manageable, even savvy.
Cost Per Square Foot to Build an ADU in Los Angeles
Most people’s units cost between $300-$400 a square foot.
Los Angeles ADU prices are fairly similar to the prices in San Diego.
The price tag on an accessory dwelling unit can scare people, but here’s a smart way to assess your investment.
- Look up the median value per square foot in your neighborhood. For example, in the Echo Park neighborhood the median home sells for $771 per square foot.
- Let’s say you build a 550 square foot unit in Echo Park for $365 a square foot.
- You may spend $200,750 on your project, but you’re gaining about $424,050 in value.
- That means you’re adding about $223K in equity to your property. And it doesn’t take into account the added value passive rental income brings.
- In Echo Park, a 1-bedroom apartment will rent for a minimum of $2500 a month. Many rent for far more.