How Much will your ADU Cost and How to Finance it
You may be coming to the table with a ballpark idea of what your ADU could cost – we now need to get a closer look at the final costs so your financing can be ready to get your project underway.
In general the smaller the unit the more expensive per square foot it will cost. Kitchens and bathrooms are expensive compared to hallways and bedrooms. There is not much cheap square foot in a small unit – so overall build as big as you can fit and afford.
Maybe you are hoping to do some of the work yourself and subcontract out the rest to save some money. Perhaps you have heard it will only be $25,000 to fix up the garage…well legal ADU’s can cost a great deal more than that – but with todays rental market and home values it is totally worth every penny.
There are 2 kinds of costs to add up for every construction project.
Soft Costs.
These costs are sometimes overlooked at first. Depending on the size and location of your project be sure to include in your budget:
Design fees (8% - 15% of construction cost)
Consultant Fees (Structural engineering, Energy consultants, Site Survey Fees *
City permit fees - Your city website should list these
Utility Fees – cost for the new meter/hookup fee
School fees (if ADU is over 500sq ft is typically 1%)
Insuring your new structure in homeowners insurance
*Your designer will be able to let you know of any extra consultant fees needed before the design can be finalized.
Hard Costs.
These costs cover the construction and all materials used to build your unit:
- Excavation and foundation
- Framing
- Roof
- Flashing and gutters
- Windows, shades, doors
- exterior trim
- Decks
- HVAC
- Plumbing
- Electrical
- Insulation
- Drywall
- Millwork
- Paint
- Tile
- Hardware
- Mirrors
- Fireplace
- Handrails
- Appliances
THINGS TO ASK BEFORE HIRING A CONTRACTOR
In southern California the average cost to build can range between $220 $350 per square foot for typical finishes. If you are adding high end finishes to your ADU because of location and use – then the price will be higher.
With these numbers in mind a 400 sqft 2-car garage conversion could be approximately $88,000 as most of the structure is there. However, if plumbing needs moving, slab needs cutting, fireproofing the walls etc – it could be more.
A detached ADU say 499 sqft (over 500 sqft you have to pay school fees) could cost approximately $150,000. Depending on the location and finished this price could also be more.
So considering the type and use of your ADU will help in counting the costs accurately. Maybe you live in an area with highly paid professionals who will expect a clean marble clad kitchen or perhaps your parent wants cozy wood cabinetry to feel like home. These kids of finishes can save or cost thousands of dollars.
Most homeowners will hire a General Contractor to construct their ADU. After your plans are finished get at least 3 bids from General Contractor preferably before submitting to the city. If the bids come in too high – there will be time to make changes before submitting to the city. After working with many over the years, here is a list of things to ask them and consider.
Do they have any ADU experience?
Can they provide references?
Are the Licensed?
Do they use their own crew or sub work out?
OWNER BUILDER
May of us today can handle small home projects. So perhaps you are super handy and can tile, paint, install trim work etc. That is wonderful and can save tons of money. But there are some things to consider if you have never run an entire owner builder project before and we have compiled a couple of check lists to help in your project.
The order of building
Design the plans
Put the plans out to bid to various subcontractors (framers, drywallers, plumbers etc)
FINANCING
If you don’t have all the immediate capital for paying for your ADU then there are a few different sources to look at for options –
- HELOC – Home Equity Line of Credit
- This is very useful if you have owned your home for a long time and/or have enough value/equity in your home. Lenders will often lend up to 80% of your home value.
- Construction Loan from your bank.
- Depending on how much you need to add to your cash for your ADU – the bank will often lend a certain amount and then roll this into a new mortgage for you once you are done building.
- Short Term credit – Personal Laon – Credit cards) f you need a smaller amount to add to your cash on hand – these can get you through construction and have a priority to be paid off first before any other lower rate loans.
- Family resources – if your ADU is going to be used by a family member or ageing parent they may want to help by helping with the up-front cost of building.
So with all this said - if you are wanting a free consultation to discuss your ADU options - fill out our contact form and we look forward to helping you.