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The Cost of Building an Accessory Dwelling Unit (ADU) in California
Constructing an Accessory Dwelling Unit in the Golden State can be more expensive than expected due to a number of reasons, permitting and design costs, higher rates for professionals such as contractors, architects, subs, and the possible need for individual utility systems like plumbing, electrical, heating and cooling. Additionally, ADUs have a kitchen and bathroom, which can take up valuable square footage and raise costs, particularly given the smaller size of these units compared to homes.
Cost per Square Foot for a Secondary Living Space
The cost per square foot of an ADU in California fluctuates based on its size, design, and region. In general, bigger units are often less expensive per square foot when compared to smaller ones. Another option is converting an existing area into a standalone unit, which can be as big as 1,200 square feet or more. Converting an existing space may be more cost-effective as it typically costs less per square foot than a new construction unit. However, building upward, such as over a garage, can be pricier and may add $50 per square foot to the total project cost. Converting a garage is often the most budget-friendly choice since keeping the existing structure reduces costs. However, enlarging the current footprint will result in higher expenses.
Factors That Affect the Cost of an ADU
Various factors can affect the cost of constructing an ADU in California.
- ADU size: The cost per square foot is usually higher for an ADU than for a single-family home, due to the inclusion of a bathroom, kitchen, and utilities. Also, an aAccessory Dwelling Unit is a smaller construction project than a full size home development.
- Location: The cost per square foot is usually higher for an ADU than for a single-family home, due to the inclusion of a bathroom, kitchen, and utilities. Also, an aAccessory Dwelling Unit is a smaller construction project than a full size home development.
- Construction method: There are three main methods for building an ADU: conventional on-site construction, prefabricated, and panelized modular. The price of the ADU will depend on the chosen construction method, with prefabricated and panelized modular costing around the same.
- ADU Zoning and permitting: Zoning and permitting requirements can vary by city and state, and can change the cost of an ADU project. For example, some cities have specific zoning laws that dictate the size and design of ADUs, and may also require special permits or fees obtained before construction can begin.
- Access to utilities: The cost of connecting the ADU to existing utilities, such as water, sewer, and electrical, can vary greatly depending on the proximity and availability of these services. If the ADU is not by existing utilities, the cost of extending these services to the unit can add significantly to the overall project.
- Construction Materials: The type of materials used in the construction of an ADU will affect its overall cost. For example, using high-end materials, such as granite countertops or custom cabinets, will increase costs, using more low-end materials, such as laminate countertops or standard cabinets, will lower it.
- Labor: The cost of work labor, including the cost of hiring contractors, electricians, plumbers, and other specialized trades, will also affect the overall cost of an ADU project. Hiring a general contractor to manage the project can add to the price, but helps ensure the project is completed on time and within budget.
- Finishing level: The desired level of finish for the ADU will impact its cost. Adding outdoor garden spaces can be pricey, but will make the property more appealing to renters and enhance its resale value.
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Cost of Building ADUs in Different Regions in California
Here's an overview of the average cost per square foot for building an ADU in different regions of California:
- San Diego: The cost per square foot in San Diego typically ranges from $300 to $400. For example, a 550-square-foot ADU built in North Park for $365 per square foot would cost around $200,750, which could add over $177,000 in equity to the property and generate passive rental income of up to $1,800 a month.
- Los Angeles: The cost per square foot in Los Angeles is similar to San Diego, usually between $300 to $400. For instance, a 550-square-foot ADU built in Echo Park for $365 per square foot would cost around $200,750 and result in a value increase of about $424,050 and an equity boost of $223,000.
- San Francisco and Bay Area: The cost per square foot in the Bay Area can range from $400 to $600. For example, a 750-square-foot ADU built in San Jose for $450 per square foot would cost approximately $337,500 and add around $213,000 in equity to the property.
Financial Considerations of Building an ADU
- Property taxes: Adding an ADU will increase property taxes, but it will not trigger a reassessment of the entire property, as the state will only assess the recent addition.
- Financing options: A home equity line of credit, construction loan, government ADU grant programs, HomeStyle Renovation loan and more, can be used to finance an ADU.
In conclusion, building an ADU in California can provide monetary value and benefits to a homeowner's lifestyle and resale value. A $100,000 garage conversion can bring in a 15x return on investment over 30 years, so building an ADU as large as your lot will allow is highly recommended financially. The ADU Guide provides a proven formula to help homeowners start their accessory dwelling unit projects.