ADU Cost & ROI Calculator — Accessory Dwelling Unit Planner

Building a detached ADU typically costs between $250 and $450 per square foot. For a standard 500 square foot unit, expect total project costs including utility connections and permits to range from $130,000 to $250,000, depending on the quality of finishes and local labor rates.

Yes, garage conversions are generally much more affordable. They typically cost between $120 and $220 per square foot because the foundation, framing, and roof are already in place. However, you must still budget for insulation, drywall, plumbing, electrical, and updated energy code compliance.

Yes, ADUs require building permits, which often range from $2,500 to $6,000 depending on your municipality. Some regions have streamlined ADU permitting processes to encourage development, but you will still need zoning approval, utility connection permits, and standard construction inspections.

Yes, taking a DIY approach (self-building) can save you approximately 20% on overall project costs by eliminating general contractor overhead and significantly reducing labor expenses. However, you must still hire licensed professionals for specialized work like plumbing, electrical, and HVAC to meet building codes.

Utility connections are a major expense, especially for detached ADUs, often costing $5,000 to $12,000. This includes trenching and running new water, sewer, and electrical lines from the main house or the street. Attached ADUs and garage conversions usually have lower utility connection costs ($2,500 to $7,500).

To calculate ROI, subtract your annual estimated expenses (maintenance, insurance, taxes, typically 2% of the project cost) from your expected annual rental income to find the net cash flow. Divide the net cash flow by the grand total project cost and multiply by 100 to get your ROI percentage.

A strong payback period for an ADU is typically between 7 and 12 years. If your rental income allows you to recoup the initial construction and permitting costs within this timeframe, it is generally considered a highly favorable real estate investment.

An attached ADU shares at least one wall with the primary residence and typically requires a 1-hour rated firewall separation. A detached ADU is a standalone structure in the backyard. Detached units offer more privacy and often command higher rent but come with higher construction and utility trenching costs.

Yes, adding an ADU will trigger a reassessment of your property value, which will increase your property taxes. However, in many jurisdictions, only the value of the new addition is assessed at the current rate, while the primary home's original tax basis remains unchanged.

Zoning regulations vary widely by city and state. Common restrictions include minimum lot sizes, maximum ADU square footage (often capped at 800-1200 sq ft), setback requirements (e.g., 4-5 feet from property lines), and sometimes owner-occupancy requirements or replacement parking mandates for garage conversions.