Most people are amazed at what it costs to build an ADU. We come across articles all the time that get the wrong impression about the actual cost of ADU development. We want to make this clear and in the next few articles starting with this one we will review the different types of ADU development costs.

It’s tempting to look at average cost per square foot numbers online, if you do so make sure you are checking the proper cost, there are several reasons that ADU’s cost more per square foot than typical single-family homes.

And here are some of the reasons why:

  • Most permitting and design fees are fixed costs, which means you must pay them no matter the size of the home or ADU.
  • ADU’s require a bathroom and kitchen, which is ‘expensive’ square footage.
  • Since ADU’s are smaller, the cost per square foot is not offset by extra bedrooms, large living spaces, and hallways that you would find in larger homes. These spaces are considered ‘cheaper’ square footage and normally bring down the average cost.
  • ADU’s require new utilities connections which adds to the cost of rough construction opposed to a room addition that doesn’t require it.
  • Just like a regular house, ADU’s require new foundations, plumbing, electric, heating and cooling, and a separate roof.
  • The larger the unit, the cheaper your cost per square foot. Detached 1,200 square foot unit is likely to be cheaper per square foot than a 400 square foot unit.
  • Building up is more expensive and can increase the cost per square foot by up to 50%. A lot of home owners seek to build an ADU above their garage.

Cost per square foot can vary significantly depending on the size and structural form of an ADU.

 

Developing an ADU – New Construction Attached or Detached:

Developing a new construction ADU is another option you may consider; it can be a unit that is detached from the main home or an attached unit.
This type of ADU development is more flexible compared to a garage conversion where you use an existing structure, with this type of development you are able to create your desired foot print and determine the location on your lot, of course dependent on regulations and planning codes.

You can design and plan a unit from 150 square foot to a max of 1,200 square foot, 1 story or 2 stories.

The associated costs are:

  • Design, planning and permit expedite will vary based on size: $8,000.00-$15,000.00, for example a 499 square foot, 1-bedroom, 1-bathroom unit cost is $9,500.00.
  • City fees will average* at: $4,000.00-$8,000.00, for example a 499 square foot, 1-bedroom, 1-bathroom unit cost is approx.  $4,000.00.
  • Construction labor and material will average* at $200-$250 per square foot, for example a 500 square foot, 1-bedroom, 1-bathroom unit average cost is $99,800.00-$124,750.00
  • Total average* cost of our example a 499 square foot, 1-bedroom, 1-bathroom unit cost is $113,300.00-$138,250.00

Sounds like a lot of money, but let’s look at return on investment:

The average value per square foot for a home in Los Angeles is $523.00. The average* cost of a new construction ADU based on our example a 499 square foot, 1-bedroom, 1-bathroom unit is  $252.00 per square foot. Can you see the added value?

That value doesn’t even take into account the passive rental income that the unit will bring, 1-bedroom 1-bathroom ADU’s rents in LA on an average of $1,750.00 per month.

*Average costs: project costs are dependent on city fees, project location, project size, existing garage condition of framing and foundation, proximity of utility connections and owner selection of finish materials such as; flooring, doors, windows, cabinetry, tile, stone, etc.…

 

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