Building a Backyard ADU in SoCal - Cost?

Question

Hey guys, I am currently thinking about putting an offer for a house. I spoke to a few GC about a 500 sq feet 1bed 1bath detached ADU in the back yard of the house. They gave me approximates of 100-120k. Does this sound right? How do I prevent myself from being taken advantage?

I'm afraid they will give me a low bid amount for an ADU and then they will jack up the price midway through the process because of xyz reasons. What is the best way I can protect myself? How long do you think it will take to actually finish building the ADU unit?

Justin R. · Answer

@Dave Chan Think you have good advice on this thread already - I'll specifically echo the advice to search your network for someone with experience, or find a way to get someone who has experience involved in your project.  That could be as a friend, as a lender, a paid project manager, or ????.

In the small residential construction game, there's basically three general options:

1. Hire a "firm" to build something.  They're often called "design/build" and have a whole operation, people, and back office.  They'll package up everything for you - plans, engineering, permitting, construction, material selection - and do it for you.  It's like hiring a party planner for your 50th birthday party.  Pay, then just have fun.  You'll pay, for example, $300/sf vertical cost for a 500sf ADU.  Imagine: You go to their showroom every two weeks and they help you pick from the 10 flooring samples they have.

2. Hire a "guy" to build something.  This is generally a small general contractor.  Maybe a couple of employees who produce in the field.  His wife may do the office work.  This person probably hooks you up with a designer, a permit runner, an engineer(s), and will self-perform some of the build, maybe hiring subs for parts of it.  It's generally not expertly managed and hiccups are to be expected.  But, you'll pay probably $225/sf vertical.  Imagine: He gives you the name of a flooring store and tells you to go pick any floor under $X/sf.

3. Owner/Build it.  This is you acting as project manager, finding your own service providers all the way through.  Hire your own subs.  You can pay closer to $150/sf vertical at this.

You really just need to decide what sort of build experience you want to have and, if you're not paying cash for the project, what your lender will require.  The cost of having your hand held through the project is very high, but can totally be worth it if that's what you want+need.  The thing is you'll never make money long term by paying retail rates for your construction as described in #1.  The more layers you cut out of the process, the closer you'll get to profit as an investor.

Other than that, I'd echo everything @Whitney Hill said. Except the permitting timeframe - at the moment it will be 2-3x that timeframe in City of SD, but that's super dependent on which municipality you're in.

Whitney Hill · Answer

Best way to protect yourself: be knowledgeable about all the different costs so you know what to look for in bids and can hold your providers accountable. Also work with a GC that provides transparency with good project mgmt. Be aware of all the requirements from city, e.g. will you need to upsize water meter (adds thousands).

Timeline: 6-9 months. Plans & engineering = 4-6 wks, Permitting = 4-6 wks, Final budget = 1wk, Construction 14-18 wks

Best size for ADU: be aware of any significant break points where different fees apply. In San Diego, if your ADU is under 500 sqft, it will not require civil engineering review (stormwater, catch basins etc). If your ADU is under 750 sqft, no impact fees (except for school fees).... you can fit 2BR/2BA in a 750sqft space.

Cost breakdown: 500sqft 1BR/1BA would put vertical build price closer to $150K (includes all finishes at a standard level, e.g. SS appliances, quartz counters, all fixtures). Budget another $25K for sitework ($10-15K), plans ($5-8K), permits ($5-7K)... plus another $7500 for solar if none on existing primary residence. Someone else mentioned $250sqft... that's the vertical construction price at a 1000sqft build. For 500 sqft, vertical is $310/sqft, $360/sqft all-in (incl sitework, plans, permits)... for 1000 sqft, you're at $245/sqft vertical, $270/sqft all-in.

Boris Suchkov · Answer

@Dave Chan I usually give $250/sq. ft. as a starting price for ADU construction, so your quotes are not far off. However, I’ve seen bids range from $180 to $350. There are many factors that will affect the final cost, including jurisdiction (some cities love to add fees and requirements like having a tree protection plan); level of finishes (is it a rental with basic finishes, or something higher end for family use?); and whether or not you want separate utilities/meters.

Your best bet is to get three bids from reputable contractors and ask to see exactly what’s included in each bid. It typically takes a year to build an ADU, from design and permitting through the end of construction.

Matthew Forrest · Answer

@Dave Chan When I’m thinking about putting in an offer, the right answer is to ALWAYS put in the offer (as long as you’re not wasting your agents time). Those numbers for your ADU build are definitely in the ballpark, but actual costs depend on so many factors. One comment that I have is that 500 sqft seems small. For most stand alone new ADUs I’ve seen, bigger is better. In terms of avoiding getting taken advantage of, your best bet is to work with someone with a good reputation. Find a reference within your network, or look BP for a good contact. If you absolutely cannot find any references, work with someone that has significant experience building ADUs in your area. Ask to see examples of past projects and hopefully one will be similar to yours.

Building a Backyard ADU in SoCal - Cost?

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