ADU Cost Per Square Foot: Breakdown and Comparison

ADU cost per square foot is anywhere between $150 and $600, depending on the lot size, location, zoning requirements, and personal preferences. Knowing the cost per square foot of an ADU plays a pivotal role in determining the suitability of adding a secondary unit to an owner’s property. These independent suites function as multipurpose living spaces and can offer excellent return value to the homeowner. 

The cost of building such dwelling units depends on a myriad of factors ranging from the building style and size up to technical details such as the utilities and furnishing required. 

In this article, we will examine the ADU cost per square foot in detail. We will walk you through the major costs involved and break down the factors that impact the ADU’s overall construction expenses.

Funding Your ADU With RenoFi

RenoFi is the smartest way to finance your ADU project. ADUs not only increase your home’s value after renovation but can also generate rental income. However, ADUs are costly. If you don’t have enough equity in your current home, funding ADU construction with a home equity loan is impossible.

For example, let’s say your current home value is $500,000, and your outstanding mortgage balance is $400,000. You are planning on adding an ADU and expect the value of your home to increase to $640,000. Your current loan-to-value ratio (LTV) is already at 80%, which means that most home equity loans are out of reach because that’s the maximum LTV they allow. So, your borrowing power using your current equity is $0.

RenoFi, on the other hand, would allow you to go as high as 150% LTV of your current value or 90% of your after renovation value, whichever is lower. So, in this example, while using a standard home equity loan results in your borrowing power being $0, a RenoFi loan allows you to borrow up to $176,000 by using the after renovation value of your home!

Get started with your RenoFi loan here

How Much Does an ADU Cost Per Square Foot?

Accessory dwelling units are versatile living spaces built on the same lot as the main residence. Just like a mini house, they feature a living room, kitchen, bathroom, and one or more bedrooms, depending on the available backyard space and chosen structure. These granny flats are a valuable investment and help generate extra income by being used as short—and long-term rentals, such as Airbnb. 

Building an ADU is a complicated task that requires a considerable sum of money and expertise. It can cost from $150 to $600 per square foot or more, which varies based on the location, size of the lot, zoning requirements, and other personal choices. 

Our team at RenoFi is committed to helping you navigate the complexities of ADU development and balance your vision with practical considerations. With our resources, expertise, and financing options, your dream ADU design can become a tangible reality at an affordable rate!

What Are the Construction Costs Involved in an ADU?

The building costs of an ADU fluctuate greatly and are divided into two major components: soft and hard costs. Soft costs refer to additional costs not directly linked to the construction but more connected to the planning and preparation process. In contrast, hard costs are directly related to labor, materials, and machinery used during the building process. 

The soft cost comprises about 10 to 15% of the total ADU cost, and the remaining 85 to 90% is accredited to the hard costs. Let’s break down what each of these construction costs involve:

Design and Consultation Cost

The initial stage of planning an ADU focuses on designing and creating a blueprint for the structure. This is done by a certified architect who charges approximately 15% of the total price of the project. 

Next, a consultant is hired who manages the calculation of the exact frame measurements, ensures energy efficiency, and provides support for any additional problems that arise. The cost of these consultation services usually starts at $8000 and may rise depending on the specific requirements of the unit’s structure.

Permit Cost

Before laying the foundation of the ADU, it is essential to ensure that the design complies with the local zoning restrictions. Every municipality has its own set of permissions for building granny flats, known as permits. The permit can cost around $2000 to $11000 based on the location, size, and value of the dwelling unit and must be obtained prior to the ADU building process.

Site Preparation Cost

Site preparation is essential to ensure the ADU’s firm and secure foundation. This involves the cost of leveling uneven ground, clearing the premises, conducting necessary soil tests, and other tasks that prepare the land for construction.

Review the following table for prevalent cost details.

Construction Cost

The most significant expense of an ADU is its construction cost. This covers the building, renovation, and completion of the dwelling unit and encompasses all other financial expenditures. An ADU of size between 400 and 600 sq ft usually requires up to $200,000 to $300,000 or more, depending on the design’s complexity, specific requirements, and finishing required.

Miscellaneous Cost

The cost of installing plumbing, electrical, and HVAC facilities is also considerably high and must follow the local building requirements. Additionally, a modern finish helps boost the aesthetic appeal of the property and is definitely worth the extra money. Some other features, such as furnishing, flooring, and outdoor spaces, can also add to the total project value.

Contingency Cost

Contingency funds are kept separate from the primary finances of an ADU for unforeseen circumstances. These include unexpected delays due to severe weather conditions, holdup during the permitting process, and slow delivery of materials and machinery. 

All of these can account for increased labor and construction costs. For the safe side, set apart at least 10% of the total project cost for contingency and assist the help of experts, such as those at RenoFi, to design a layout that mitigates unanticipated expenses.

What Are the Factors That Affect the ADU Cost per Square Foot?

The final cost of an ADU project can only be calculated after considering several factors. From major decisions like the ADU style to minute ones like the flooring type, each feature can influence the ADU cost per square foot and is important to be aware of when building the unit. 

Here are some primary factors that significantly impact the ADU construction cost:

Style of ADU

The structure of the ADU is one of the first decisions to make and plays a pivotal role in determining its final cost. These dwelling units can be constructed either attached to the main property as detached units or converted from existing spaces. 

The most popular type is a detached ADU located in the homeowner’s backyard. These units improve the privacy of the occupants by providing a separate entry and are ideal for rental purposes. However, the vast distance between the in-law suites and the main house makes them more costly than the attached type.

Another sought-after style of ADU is constructed on top of an existing garage or carport area. These structures maximize the living space on the property and are relatively cheaper than the detached units. 

ADUs can also be made by converting existing spaces, such as basements and attics, into livable areas. Since the foundation of the unit and other amenities are already provided, this style is one of the least expensive ADU building options. However, these conversions may involve additional charges depending on the foundation’s quality and need for reinforcement.

Lastly, a prefab ADU, short for prefabricated accessory dwelling, is the cheapest and easiest to install granny flat type. It comes with a preassembled structural shell and interior and exterior finishing for convenient and quick installation. 

Prefabs allow the homeowner to avail 10 to 20% savings on the final calculated value of the ADU project compared to a custom build of the same size and quality.

Size

ADUs are constructed in a variety of sizes depending on the local size limits but generally measure between 400 and 1200 sq ft. As a general rule, the larger the size of the ADU, the higher the final cost of the project. While it costs significantly more to build a sizable ADU, it offers a lower cost per square foot compared to the smaller units. 

This happens because the construction costs are well distributed across the area, offering better value for money. The average price of a 400 sq ft unit lies between $60,000 and $120,000, whereas for sizes greater than 750 sq ft, it starts from $100,000 and goes as far up as $400,000.

Location

Whether you are buying a property or building one from scratch, its location plays a vital role in reducing the cost involved. This is because multiple factors, such as labor rates and site conditions, differ from area to area and can influence the building costs of the dwelling unit.

For instance, labor rates are substantially higher in densely populated areas such as Los Angeles or San Jose as compared to California’s other secluded places. Similarly, the site’s accessibility helps determine the cost involved in transporting workers, materials, and machinery to and fro the building area. 

Lastly, the ADU’s location decides the permit fee that the homeowner needs to pay to build a permanent property. The in-law suite must be constructed to comply with local zoning regulations and standards; a state-specific permit fee, impact fee, and other additional charges must be paid.

Foundation

Different materials are used as the foundation of the ADU for differing prices. The slab is the most common and cheapest type of foundation, whereas poured and crawlspace are other pricey alternatives. 

The flatness of the build site also impacts the cost and ease of the foundation’s installation. A flat lot requires minimal site preparation and is an effortless and affordable option. On the other hand, a sloped or uneven yard makes it challenging to lay down the foundation and bring equipment to the property. The problems associated with an inclined lot can increase the construction cost by 25%.

Amenities

Adding amenities to the ADU makes it an efficient and attractive living solution for occupants with special needs. While the inclusion of such services requires investment, they help rent the property to tenants for higher prices.

The most common amenities include large windows, skylights, and French doors that create a sense of openness in the unit and keep it well-lit for aging residents with vision problems. Meanwhile, a fireplace and HVAC system ensures the granny flat is kept cozy and comfortable all year. Other convenient additions include a dishwasher, a separate hot tub, and laundry services.

Interior Finishes

The materials used inside the dwelling unit can be personalized to suit the homeowner’s vision but may contribute massively to the final cost of the ADU. These interior finishes consist of details like the ADU flooring, painting, faucets, countertops, and light fixtures. 

For example, high-end fixtures like granite countertops are costlier than composite designs. Additionally, premium-quality hardwood greatly elevates the unit’s aesthetics but costs far more than basic lamination or carpet flooring. Opt for materials that maintain a good balance between looks, functionality, and budget. 

Equipping these independent suites with essential furniture and appliances makes them stand out to the renters and guests. Invest in stainless steel appliances and necessities like tables, bar stools, and sofas in the kitchen and living area.

Conclusion

To conclude, building an ADU is a big decision that requires substantial investment and consideration by the homeowner. Variables such as the type, size, location, and interior of the dwelling unit are great indicators of the final cost of the project and must always be examined. 

RenoFi loans are the most innovative way to finance a home renovation project. Unlike traditional loans, which are based on your current home value or require you to refinance your primary mortgage and give up your low rate, RenoFi loans are based on the after-renovation value of your home. This allows you to borrow, on average, 11x more, get a low monthly payment, and keep your low rate on your first mortgage. 

Kickstart your ADU planning and development journey with our pre-approved floor plans and reap the benefits of these hefty but worthy investments!