Prefab ADU: Costs, Tips, and Everything You Need to Know

Aug 25, 2023 | ADU

As the housing landscape evolves, the concept of prefab accessory dwelling units (ADUs) has gained significant traction. With a surge in companies specializing in prefab construction, homeowners now have an enticing alternative to traditional construction methods. However, as you contemplate whether a prefab ADU is the right fit for your needs, it’s important to navigate through the details and understand the multifaceted aspects of this innovative housing solution.

What exactly is a prefab ADU?

A prefab ADU, where “prefab” stands for prefabricated, refers to an accessory dwelling unit that is partially or fully constructed in a factory setting. Subsequently, the unit is transported to your property and assembled on-site.

The advantage of a prefab ADU lies in its ability to minimize disturbances to your property compared to constructing an ADU from scratch. Rather than the usual construction timeline of 7-10 months, you can expect a few weeks for site preparation and a few days to a week for the actual installation of the unit.

There are two primary types of prefab ADUs: modular and panelized. These two categories entail distinct transportation requisites from the factory to your designated location, as well as differing installation procedures.

1. Modular prefab ADUs

These units come in predetermined sizes and are delivered either as a single module (suitable for smaller ADUs) or multiple modules that are interconnected on-site. The installation of modular prefab ADUs might necessitate the use of a crane to position them accurately on your property. Note: Shipping container ADUs also fall within this classification.

2. Panelized prefab ADUs

These ADUs are crafted in sections consisting of panels, which are transported on a flatbed truck and subsequently assembled room by room at your chosen location. This approach results in an ADU with a framed structure and a completed exterior. Following this assembly, you will be responsible for incorporating the electrical and plumbing systems, as well as completing the interior finishes. Some panelized prefab units come with a modular utility core that is lifted into place using a crane.

Is it possible for a prefab ADU to function as a legal dwelling?

Absolutely! Prefabricated (prefab) ADUs are purposefully designed by companies to adhere to the building code prerequisites for ADUs in the specific regions they serve. These codes encompass a range of factors, including:

  1. Maximum and Minimum Size Limits
  2. Kitchen Requirements
  3. Bathroom Requirements
  4. Connectivity to City Utilities: Electricity, Sewer, Water (and possibly natural gas, although this is being phased out in many areas)
  5. Structural Specifications
  6. Energy Efficiency Standards

When a prefab ADU conforms to these mandated building criteria, it is officially recognized as an integral component of your real estate property. This distinction holds considerable significance in terms of the ADU’s future valuation. Notably, in some regions like California, certain legally recognized ADUs might not be regarded as part of your property.

For example, movable tiny homes can be constructed off-site (thus qualifying as “prefab”) and are classified as legal ADUs. However, because they lack a physical connection to the property, they aren’t considered part of the real estate. Consequently, they do not contribute to the overall value of your property.

It’s important to differentiate between prefab “sheds” and prefab ADUs. While using prefab sheds as home offices might be legally acceptable, utilizing them as living spaces is typically not permitted. As a result, they tend to add considerably less value to your property compared to a prefab ADU, although they also come at a lower cost, especially if they lack kitchen or bathroom facilities.

Prefabricated ADUs are subject to the same building permits as custom ADUs and are required to successfully pass identical city inspections. These inspections occur on the factory floor during various stages of the ADU’s construction. While there will be some on-site inspections, a majority will transpire at the factory. This means you won’t need to be intricately involved in the inspection process or wait for city inspectors on-site.

The Prefab ADU Revolution

The Prefab ADU Revolution

Prefab ADU manufacturers are continuously expanding their design portfolios, offering an array of architectural styles, ranging from sleek contemporary models to the charm of modern farmhouse, and even the timelessness of traditional ranch and bungalow designs.

The affordability of prefab ADUs spans a wide spectrum, accommodating a diverse range of budgets, from those seeking more modest options to those with a taste for the extravagant. Regardless of your personal preferences and financial considerations, the likelihood is high that you’ll find a prefab ADU that aligns with your vision.

These manufacturers are not only accommodating in terms of design and cost but also when it comes to experiencing their creations firsthand. They extend the invitation for you to tour model homes, granting you the opportunity to step inside these units and assess the quality of their construction and finishes. This firsthand interaction can be instrumental in making informed decisions.

Walk-throughs play a pivotal role in helping you conceptualize the available space. Even if you were to demarcate an 800-square-foot area in your backyard, comprehending the actual volume and ambiance remains elusive until you physically occupy the space. This inherent challenge is mitigated by the significant advantage of prefab ADUs: the chance to genuinely experience the dimensions and atmosphere.

Moreover, you’re empowered to delve deeper into the manufacturing process itself by visiting the factories where these ADUs are brought to life. This unique opportunity provides a firsthand insight into the intricacies of construction. During these visits, representatives from the manufacturing companies guide you through every aspect of the build and showcase a variety of interior and exterior finishes. This immersive encounter is not only captivating but also greatly contributes to fostering comfort and confidence in the idea of investing in a prefab ADU.

What are the potential sizes of prefab ADUs?

Prefab ADUs are subject to the same size limitations as other types of accessory dwelling units. In California, for instance, each single-family home is granted the allowance of constructing an ADU that meets the following criteria:

  • Minimum Size: At least 800 square feet, irrespective of factors like FAR (floor area ratio), lot coverage, open space availability, or minimum lot size requirements.
  • Maximum Height: 16 feet.
  • Setbacks: Rear and side setbacks of 4 feet each.
  • Minimum Area: 150 square feet.

These stipulations represent the minimum requirements. However, in accordance with California state law, the upper limit is set at 1200 square feet, and numerous local jurisdictions adhere to this maximum. Additionally, many regions permit the construction of 2-story ADUs, since a height of 16 feet typically corresponds to a single-story structure. Should your city lack a specific ADU ordinance, you are entitled to adhere to the state-level regulations.

When it comes to modular prefab ADUs, they generally come in a selection of three primary models: studio, one-bedroom, and two-bedroom. A handful of companies even extend their offerings to include three-bedroom models. This assortment of models empowers homeowners to select the configuration that best suits their needs and preferences.

Ideal Characteristics for Prefab ADU Placement

Zoning is as important as the prerequisites for a suitable lot for installing a prefab ADU extend beyond the need for expansive and level terrain. While a sprawling flat lot isn’t a necessity, certain properties are particularly well-matched to prefab structures. Here are key considerations for optimal prefab ADU placement:

Terrain Characteristics

Land that is either flat or possesses a gentle slope is highly conducive for prefab ADUs. However, extreme hillside properties might pose challenges. While slightly sloping land can be leveled with the incorporation of retaining walls, steep hillside terrains could demand costly preparation efforts or might not be geologically stable enough to meet building code stipulations.

Street Configuration

An adequately wide street is vital, as the delivery and installation of prefab ADUs involve the use of large trucks and equipment. The street must be able to accommodate these vehicles comfortably.

Street Accessibility

The path to your property must encompass fairly straight streets to allow the delivery trucks to access your site with ease. Unrestricted and direct access is imperative for the successful installation of a prefab ADU.

Driveway Size

While not mandatory, a spacious driveway significantly facilitates the installation process. A roomy driveway permits the delivery trucks to get closer to your backyard, streamlining the prefab ADU installation. In cases where there’s ample driveway space, a modular ADU can be maneuvered into position using rollers. On the other hand, if space is limited, a crane might be necessary for lowering the unit into place. Panelized prefabs, which arrive in sections, are inherently easier to maneuver, and a spacious driveway minimizes the risk of any inadvertent property damage during installation.

Obstruction-Free Crane Access

A vital factor to consider is the presence of power lines obstructing the path of the crane used for installation. In urban areas, power lines can pose challenges during both custom and prefab ADU installations. Special permits might be necessary to construct within utility easements. However, when it comes to craning a prefab unit into place, power lines can severely impede the process. Even if you’re willing to undertake the risk of maneuvering over the lines, utility companies and local authorities often prohibit such actions.

In essence, while an expansive flat lot isn’t a prerequisite for installing a prefab ADU, the topography of the land, street attributes, driveway size, and the absence of obstructions play pivotal roles in ensuring a successful and hassle-free installation process.

Do prefab ADUs offer a more cost-effective alternative compared to custom ADUs?

Do prefab ADUs offer a more cost-effective alternative compared to custom ADUs?

A prevailing misconception surrounding prefab ADUs suggests that they are inherently more budget-friendly than conventionally constructed stick-built ADUs. However, this is not necessarily accurate. In most instances, prefab ADUs and stick-built ADUs of similar dimensions and quality tend to carry comparable price tags.

While perusing the websites of various prefab manufacturers, it’s not uncommon to encounter seemingly affordable price quotations that appear lower than the costs associated with custom stick-built ADUs. It’s important to exercise caution and recognize that these quoted prices typically pertain solely to the unit itself. It’s essential to keep in mind that additional expenses such as site preparation, transportation, installation, and other related factors will contribute to the overall cost.

While a few companies specialize in offering low-cost prefab options, exploring these options is advisable if you’re working within a constrained budget. Nevertheless, it’s crucial to bear in mind that if these prefab factories are situated far from your intended building site, the expense of transportation could potentially erode the initial savings you might have anticipated. Careful consideration of all associated costs is paramount to making an informed financial decision.

Considering the wide array of options available, the cost of prefab ADUs, inclusive of installation, can be categorized as follows:

  • Studio (Approx. 160-350 SQF): The cost falls within the range of $150,000 to $275,000.
  • 1-Bedroom (400-600 SQF): The estimated cost ranges from $225,000 to $325,000.
  • 2-Bedroom (550-800 SF): You can expect to pay between $275,000 and $375,000.
  • 3-Bedroom (850-1,000 SF): the cost typically falls within the range of $400,000 to $450,000.

These cost approximations encompass the installation of the ADU, which is a crucial consideration. It’s worth noting that this pricing approach differs from the prefab company’s “base price.” The base price often only covers the unit itself, excluding installation and other phases of construction. It’s essential to delve deeper into the specifics when assessing costs.

Bear in mind that these prices are subject to change from year to year. Reputable prefab companies should be able to provide you with a current, itemized quote that clearly delineates which expenses are covered within the base price and which are not.

The wide spectrum of pricing can be attributed to various factors. The quality of the prefab ADU, spanning from more economical options to luxury offerings, significantly influences the variation in cost. Naturally, the size of the ADU plays a role, but there are additional contributing factors as well.

Two fundamental categories of prefab ADUs exist: modular and panelized. These categories have distinct transportation prerequisites from the factory to your desired location, as well as varying installation processes. These differences notably impact the final cost, adding to the overall price diversity within the market.

Unveiling the Comprehensive Breakdown of Prefab ADU Costs

When embarking on your investigation into the cost of prefab ADUs, you may initially encounter surprisingly low price quotations. However, it’s important to recognize that these quotes often pertain solely to the unit itself. The final cost of your prefab ADU encompasses a range of components that extend beyond the unit’s base price. Here’s a detailed breakdown of the various phases involved in prefab ADU design and construction. Many of these elements are relevant to stick-built ADUs as well.

Design and Permitting

The design fee is typically integrated into the unit’s base price. However, permitting fees may not be covered. While many prefabs offer pre-approved plans, customization can alter the design and permitting fees. Even minor modifications, such as changes to windows and doors, can impact energy calculations, resulting in the loss of “pre-approved” status. This can lead to longer plan approval times and increased costs.


The demolition of existing structures, such as a garage, to make way for the ADU might not be included in the prefab company’s base price. Additional charges could apply, or the company may direct you to a local contractor for these services.

Site Preparation

Determine whether site preparation is part of the base price. Be aware of potential extra charges for challenging sites. Factors like filling empty swimming pools, leveling sloped terrain, trenching through non-soil materials, and removing large trees can incur additional costs.

Licensed Contractor

While a few companies include a licensed contractor’s services in the base price for ADU installation, many do not. If not included, you’ll need to hire and negotiate fees with a contractor yourself.

Foundation and Utility Hook-ups

These are often covered in the prefab’s base price. Yet, costs for activities like trenching electrical, water, and sewer lines can vary depending on lot size and ADU placement. Upgrading the electrical panel, often necessary for ADU addition, could also result in additional expenses.

Delivering the Prefab ADU

Delivery costs are sometimes included in the base price, but not always. Some companies may charge per mile. In California, transporting a load wider than 14 feet necessitates a police escort, incurring extra fees. If street closure is needed for ADU delivery and placement, the city could require a permit fee. The cost of a crane for modular unit placement might or might not be included and can be substantial.

Exterior Finishes

Most prefab ADUs include exterior cladding in the base price. Certain companies offer various finish levels or exterior upgrades.

Interior Finishes

Some companies provide all-inclusive packages that cover everything from flooring to appliances, often with multiple finish levels available. However, some companies exclude interior finishes from the base price, requiring separate payment. You’ll likely need to engage your contractor for interior finish installation.

While assessing the feasibility of an ADU, income generation is a key factor. Additionally, future value should be considered during ADU development. It’s crucial to evaluate how lenders appraise the specific prefab ADU model you’re considering for resale. Most banks appraise prefab ADUs differently from stick-built structures, which can significantly influence future valuation considerations.

Inquiries to Address with Your Prefab Company

Inquiries to Address with Your Prefab Company

When engaging with a prefab company, it’s essential to inquire about the following aspects to ascertain what is encompassed within the base price and the associated costs for items not covered:

  • Design: Determine whether the design services are included in the base price or if there are additional charges. Seek clarity on customization options as well.
  • Permitting: Confirm if permitting fees are integrated into the base price. Understand the company’s role in the permitting process and any potential extra charges.
  • Licensed Contractor: Inquire about the inclusion of a licensed contractor’s services in the base price. If not included, understand the process of hiring a contractor and managing associated fees.
  • Demolition of Existing Structures: If you need to demolish existing structures to accommodate the ADU, establish whether this is covered in the prefab company’s base price or if there are supplementary charges. Alternatively, inquire if they can direct you to a local contractor.
  • Site Preparation: Ascertain if site preparation costs are part of the base price. Understand if additional charges apply for complex sites, such as those with slopes, trees, or other challenges.
  • Utility Hook-ups: Clarify whether utility hook-up costs are included in the package or if they are separate. Understand potential variable costs based on lot size and ADU location.
  • Electrical Panel Upgrade: If an electrical panel upgrade is required, determine if it is included in the base price or if there’s an additional charge. Inquire about the necessity for this upgrade and its potential implications.
  • Electrical Upgrades for All-Electric ADUs: If local requirements mandate electrical upgrades for all-electric ADUs, understand if these are included in the base price or if they incur extra costs.
  • Foundation: Inquire about the inclusion of the foundation in the prefab ADU package. Understand any potential variances based on the chosen model and site conditions.
  • Delivery: Ascertain whether the cost of delivery is incorporated into the base price. Understand potential mileage charges and any associated fees, such as a highway escort fee.
  • Crane Fee: If a crane is required for installation, determine whether this fee is included or an additional charge. Understand the circumstances that necessitate crane usage.
  • Installation: Inquire about installation costs and if they are part of the base price. Understand the process and any potential considerations.
  • Interior Finishes: Clarify whether interior finishes, such as insulation, drywall, flooring, cabinets, and appliances, are included in the base price or if they incur separate charges.
  • Solar Panels: For ADUs in California, understand if solar panels are required and whether they are included in the prefab package. Determine if there are exceptions based on shading conditions.

Key Considerations When Considering Prefab ADUs

Delving into the realm of prefab ADUs necessitates a comprehensive understanding of crucial aspects that can influence your decision-making process. Here’s an in-depth exploration of key factors to pay heed to:

Design Flexibility and Customization

Prefab manufacturers typically offer an array of predefined floor plans and designs, often allowing customization primarily within the realm of finish materials. Some may extend the option for limited layout alterations within the existing footprint of the chosen model.

Inclusions in the Package

Before committing, ascertain whether the prefab or manufactured ADU package encompasses the cost of finish materials and appliances. Additionally, clarify responsibilities for site surveys, permits, and utility hookups. Site preparation can range from minor to significantly costly, contingent on the landscape. It’s crucial to note that prefab/manufactured ADU packages usually exclude the foundation.

Efficiency in Design, Planning, and Permitting

Prefab/manufactured ADUs exhibit notable speed in the realms of design, planning, and permitting. Predesigned plans result in minor alterations, expediting the permitting process. Most often, the permitting procedure involves state-preapproved plans that are submitted locally with supplementary site documentation. This streamlined approach facilitates swift review and approval.

Compliance and Energy Efficiency

Many prefab ADUs conform to Title 25 standards for material use and energy calculation, which is comparatively less rigorous than the standards stipulated by Title 24 for stick-built constructions. It’s imperative to research the distinctions between these regulations and determine which aligns best with your needs and objectives.

Cost Considerations

While a common perception suggests that prefab ADUs are inherently more cost-effective than stick-built alternatives, it’s important to assess the total expenses comprehensively. A meticulous comparison that factors in all costs often reveals minimal or no significant difference. It’s worth noting that while certain low-end manufactured units might seem economical, they often don’t present an apples-to-apples comparison with stick-built constructions.


In conclusion, developing an accessory dwelling unit, whether prefab or stick-built, entails substantial investment of time, finances, labor, and resources, navigating the realm of prefab ADUs demands careful evaluation of various elements that span design flexibility, package inclusions, efficiency in design and permitting, regulatory compliance, and overall cost implications.

While assessing the advantages of prefab ADUs compared to stick-built options or garage conversions can be challenging, our ADU consultation is available to provide objective insights. We can assist you in evaluating the pros and cons, analyzing your site’s suitability, and guiding you towards the ADU solution that optimally aligns with your lot, budget, and long-term aspirations.


  • What is a prefab ADU?
    A prefab ADU (Accessory Dwelling Unit) is a secondary residential unit on a single-family lot that is pre-manufactured in factories and then assembled on-site.
  • How are prefab ADUs different from stick-built ADUs?
    Prefab ADUs are pre-manufactured in factories and assembled on-site, while stick-built ADUs are constructed on-site from scratch.
  • What costs are typically not covered in the prefab ADU base price?
    Costs often not covered include permitting fees, demolition, site preparation, hiring a licensed contractor, delivery, and sometimes interior finishes.
  • Why might some prefab ADUs lose their “pre-approved” status?
    Minor modifications, like changes to windows and doors, can impact energy calculations, leading to the loss of “pre-approved” status and potentially longer plan approval times.
  • What challenges might increase site preparation costs?
    Challenges such as filling empty swimming pools, leveling sloped terrain, trenching through non-soil materials, and removing large trees can raise costs.
  • Are prefab ADUs appraised differently than stick-built structures?
    Yes, most banks appraise prefab ADUs differently from stick-built structures, which can influence future valuation considerations.
  • Do prefab ADUs offer design flexibility?
    Prefab manufacturers typically offer predefined floor plans and designs but allow customization mainly in finish materials. Some offer limited layout alterations within the model’s footprint.
  • How do prefab ADUs handle design, planning, and permitting efficiency?
    Prefab ADUs have speed in design, planning, and permitting due to predesigned plans, which expedite the permitting process. Most use state-preapproved plans submitted locally with additional site documentation.