Building an accessory dwelling unit or ADU on your property will cost an average of $30,000 (and can reach up to $100,000 when all is said and done).
It’s important to understand that the following factors will affect cost:
- Square footage
- The type of ADU
- Your location
In this article, we’ll break down six types of ADUs and the exact costs you can expect for each one.
(Note: There’s more to consider beyond building costs. An ADU project can be time-consuming, and the building process consists of several, often costly, steps. With this in mind, don’t go into the project without knowing your stuff).
How Much Does It Cost To Build ADU?
The least expensive ADU to consider adding to your property is a tiny home.
The ADU costs increase as you look into garage conversions and home additions. Overall, the detached ADU and the above garage ADU are the most expensive ADU types.
| Type of ADU | Average Construction Cost |
| Tiny Home | $30k – $100k |
| Garage Conversion ADU | $50k – $100k |
| Home Addition | $80k – $200k (1 or 2-story) |
| Attached ADU | $100k – $250k |
| Above-Garage ADU | $150k – $300k |
| Detached ADU | $150k – $350k (or more) |
Note: Costs can vary significantly based on location (e.g., labor rates in California vs. the Midwest), project complexity, and materials used.
Detached ADU
The detached ADU, also known as a “backyard cottage” or “granny flat,” is considered the most expensive type of ADU.
The average cost is so high because it is built as a completely separate unit from the primary residence. With a detached ADU, a new foundation has to be built, and it will have its own roof and utilities.
Expect to pay at least $150,000 for a detached ADU and, at times, more than $300,000.
| Cost Factor | Amount |
| Construction Cost | $150,000 – $350,000 (or more) |
| Annual Maintenance | $1000 – $3,500 |
| Potential Property Value Increase on a $500k home | $75,000 – $150,000+ (approx.) |
| Possible Monthly Rent | $1,000 – $2,500+ |
Above-Garage ADU
With an above-garage ADU, you can expect to pay the same amount as you would when constructing an attached ADU. On the flip side, the total cost of an above garage accessory dwelling unit is considerably higher than a garage conversion.
The issues you may run into with the above garage ADU are generally structural-related, which can be costly.
Building above the garage requires the garage to be strong enough. In turn, you may have to pay for additional framing and or footing, which are necessary to support a second story. Sometimes, an external staircase is necessary to provide tenants access–which is yet another expense.
If the size of your lot is limited, the above garage ADU is a good choice because it takes advantage of vertical space.
| Cost Factor | Amount |
| Construction Cost | $150,000 – $300,000 |
| Annual Maintenance | $400 – $1,200 |
| Potential Property Value Increase on a $500k home | $70,000 – $140,000+ (approx.) |
| Possible Monthly Rent | $1,000 – $2,000+ |
Attached ADU
An attached ADU shares at least one wall with your primary home. Thanks to this shared wall, ADU construction costs are slightly lower than those of a detached ADU. Why?
With an attached ADU, you won’t have to worry about building a separate foundation, separate plumbing system, or a separate HVAC system.
The permitting costs for an attached ADU are also lower because the structure is less complex than building something new.
| Cost Factor | Amount |
| Construction Cost | $100,000 – $250,000 |
| Annual Maintenance | $400 – $1,200 |
| Potential Property Value Increase on a $500k home | $60,000 – $120,000+ (approx.) |
| Possible Monthly Rent | $800 – $2,000 |
Home Addition (Pop-Out, One- or Two-Story)
A home addition extends the footprint of the primary residence. It’s a little different than other ADUs as it truly takes advantage of the existing structure. Note: For it to be a true ADU, it has to have a private entrance, kitchen, and bathroom.
Integrating a home addition with existing electrical, plumbing, and HVAC systems will help keep ADU pricing in check.
| Cost Factor | Amount |
| Construction Cost | $80,000 – $200,000 |
| Annual Maintenance | $400 – $1,000 |
| Potential Property Value Increase on a $500K Home | $60,000 – $130,000+ (approx.) |
| Possible Monthly Rent | $800 – $2,000 |
Garage Conversion ADU
A garage conversion ADU turns an existing garage into an additional living space. When you look at price per square foot, the garage conversion ADU is typically one of the best options. It’s a good investment for a property owner who needs more living space but wants to keep the overall cost down.
You’ll rake in savings because you don’t have to build the outer “shell” of the ADU. In addition, building permits will come at a lower cost because of the simplicity of the project compared to other ADU options.
| Cost Factor | Amount |
| Construction Cost | $50,000 – $100,000 |
| Annual Maintenance | $300 – $800 |
| Potential Property Value Increase on a $500k home | $40,000 – $80,000+ (approx.) |
| Possible Monthly Rent | $800 – $1,500 |
Tiny Home (On Wheels or Foundation)
A tiny home can serve as a fully functional ADU. It often comes at a lower cost, thanks to the size. There are also options for prefabricated models that can be more affordable and require less site preparation
However, be aware that local regulations for tiny homes can be stricter, depending on whether it’s on wheels or a foundation.
| Cost Factor | Amount |
| Construction/Installation Cost | $30,000 – $100,000 |
| Annual Maintenance | $200 – $600 |
| Potential Property Value Increase on a $500k home | $25,000 – $60,000+ (approx.) |
| Possible Monthly Rent | $600 – $1,500 |
Hidden ADU Costs Property Owners Often Overlook
While you may be aware of fees for things like construction labor, many other costs associated with an ADU addition will impact your final price. Some of these include:
- Permit and Impact Fees: Local governments may charge fees for sewer, water, and school district impacts; pricing can range from $5,000 to $20,000.
- Architectural & Engineering Plans: Custom ADUs require professional drawings and structural engineering to meet code. Hiring these kinds of professionals can cost you anywhere between $3000 and $15,000.
- Utility Upgrades: If your existing water, sewer, or electrical system isn’t sufficient, you may need to invest in upgrades that will range from $2000 to $10,000 in additional costs.
- Driveway & Landscaping: You may need to extend driveways, add walkways, or install privacy fencing, which can cost anywhere from $2000 to $15,000.
- Insurance Premiums: A second dwelling unit can increase your homeowner’s insurance costs by anywhere from $500 to $2000 per year.
- Furnishings & Appliances: If you plan to rent out furnished ADUs, factor in the cost of appliances, beds, couches, and décor.
- Financing Costs: If you take out a home equity line of credit (HELOC) or ADU construction loan, account for interest payments.
- Unrented ADUs: If you are building an ADU as a rental property, remember there are times when you may have vacancies, which will translate to lost rental income. This is a chance to use a platform like Neighbor to rent out the ADU for storage space or take advantage of unused parking spots to generate income during these times.
How Long Would It Take for an ADU to “Pay for Itself”?
Looking at the information above, you see that by the time you factor in design costs, construction maintenance, and more, an ADU doesn’t necessarily pay for itself right away. Of course, the value of a property will be higher once the ADU is added, but it can take a long time for an ADU to completely pay for itself. This table gives a very simple look at how this works and does not include the appreciation of property value.
| Type of ADU | Avg. Build Cost | Est. Monthly Rent | Years to Pay Off (at 100% Occupancy) |
| Detached ADU | $150k – $300k | $1,000 – $2,500 | 8 – 25 years |
| Attached ADU | $100k – $250k | $800 – $2,000 | 7 – 20 years |
| Above-Garage ADU | $150k – $300k | $1,000 – $2,000 | 10 – 25 years |
| Garage Conversion ADU | $50k – $100k | $800 – $1,500 | 3 – 10 years |
| Home Addition ADU | $80k – $200k | $800 – $2,000 | 5 – 15 years |
| Tiny Home ADU | $30k – $100k | $600 – $1,500 | 3 – 10 years |
Final Thoughts
While ADUs can boost a property’s value, they come at a significant cost. Remember that the space you use to build your ADU can also be used for storage or parking. If you are simply looking for a way to generate rental income using your existing property, consider working with Neighbor.com. Neighbor is a leading peer-to-peer storage platform that will help you offset lost rental income or utilize space to make extra money.
