Garage Conversion to ADU

[Yuval Hala]

Hey, I was wondering, what is the price for converting 2 car garage to a 1bd/1ba Unit?

how much the labor/rehab cost?

How much the city fees to get permit?

how long it usually take?

nothing crazy, simple 1bd/1ba Unit

thanks!

[Taylor Dasch]

It's different in every market, I know in Texas that would probably be around 25k - 35k just because you would need to add a bathroom and a kitchen. 

[Nathan Harden]

I am unfamiliar with price per sqft construction in LA but from an outsiders point of view and from my experience, getting the permits is probably going to be the biggest headache out of the entire process. I'm not sure what it's like in LA but I do know that down in San Diego county, they do not move very quickly on permits.

[Joseph Schommer]

Adding a new unit, assuming it's legal to do so, will cost no less than $40k in your market if it's pretty straight forward.  Is there plumbing in the garage or does it share a wall with a bathroom?  How's your electrical set up out there?  etc etc etc

Another possibility might be to convert some of the garage into a bedroom and force appreciation on the whole house that way.  Good Luck!

[Carlos Ptriawan]

300-500 sqft is about right in your area.

but be careful, you have to talk to an appraiser before you do this.

Don't do this before talking to a professional and experienced appraiser.

[Bruce Woodruff]

As was said above, this may not even be legal, depending on jurisdiction. Since you are in California, the odds of it not being allowed are much higher (nanny state). I used to get calls all the time to convert a garage to living space and usually it was not allowed, unless the original garage was torn down.

Garages are not built to be used as living space and therefore often do not have a vapor barrier in the slab, or the correct rebar, or concrete PSI.

So your first step is to go to the City where this is located and ask them if you can do it. If they say yes, then start getting the prices for plans/permits, engineering & architecture fees, school fees, etc...

@Carlos Ptriawan is probably close in his guess....so a 400 SF space (2 car garage) @ $400SF will run you about $160,000. Not including fees mentioned above....so you should be good at guesstimating $200k all-in....

[Carlos Ptriawan]

it's allowed, the thing is, you may lose money if you sell the house, a better option is just to buy a house that's already converted or if you wanna keep the house if garage is detached, you build the addition as living space. If it's attached , then you have to make sure it has the same heating and insulation component as in the main room. Depending on your exact location, you would not make money if the building cost is only slightly less than main house psf. But if your main house psf is 3x  the building cost, then it may be worth the effort.  

This is why building/converting a garage, from a money investment standpoint, is very tricky. It could be very profitable if you are in the location where the house is expensive, but expensive areas usually require a garage.

Think ahead before you do something like this. That's why I said ask appraiser.

[Dan Heuschele]

California politicians have gone all in on supporting ADUs. However, adding an ADU is often one of the worst RE investments. The reason @Carlos Ptriawan states is the big reason.  Contrary to what ADU developers indicate, adding an ADU typically adds much less value than the hands off cost to add the ADU.

In most markets an appraiser will value your garage conversion ADU between $50K and $100K. The hands of cost will be significantly greater than $100K. This results in an initial negative investment position. This negative position can consume years of the "cash flow" to achieve an even position and to have any real return (true cash flow).

Here is list of items that result in ADU additions being a poor RE investment:

1) The value added by the ADU addition is often significantly less than the cost of adding the ADU. Search the BP for ADU appraisals to encounter numerous examples. This creates a negative initial position. This negative position can consume years of cash flow to recover. Make sure you know the value the ADU will add to the property before building the ADU.
2) the financing on an ADU is typically far worse than for initial investment property acquisition or is often not leveraged (HELOC, cash out refi, etc). Leverage magnifies return.
3) The effort involved in adding an ADU is comparable or larger than a rehab associated with a BRRRR. However if I do a BRRRR I can achieve infinite return by extracting all of my investment. Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).
4) Adding an ADU is a slow process. It can take a year or more to complete an ADU. During this time you are not generating any return from the money invested in the ADU. This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return.
5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space.
6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties. This may affect value or time required to sell.
7) Adding an ADU does not make the property a duplex. For example in many jurisdictions I can STR units in a duplex but cannot STR an ADU (some jurisdictions will let you STR if you owner occupy). Duplex have different zoning that may permit additional units. Duplex can always add additional units via the ADU laws.
8) Related to number 1, purchasing a property with an existing ADU is cheaper than buying a property and adding an ADU. Why add an ADU if it can be purchased cheaper?

good luck

[Paul Dashevsky]

@Yuval Hala We've done a bunch of these recently...in Los Angeles, it costs about $100-120k and takes about 6 months for plans and construction. 

[Rick Albert]

The typical cost right now is about $150K all in. There are things like an independent sewer line, architectural fees, engineering, etc. It also depends on where the property is located. I'm talking from a Los Angeles perspective. It might be less expensive in Ventura County for example.

It can take about two months to get the plans approved (I've heard longer) and then about 90 days of building. 

[Lauren Vogl]

I'm in Ventura County and the city is taking 4-6 months just to look at any plans, even for the most basic thing. The cost is around 100k-125K for the conversion you're referencing. I know it doesn't seem like it should be that much. The city requires the garage concrete floor to be a certain thickness when it is inhabited vs. just used for vehicles, so I know someone who had to excavate the floor then pour a new foundation that is the proper thickness. Rents are high around here though and demand is very high for an ADU. It is a challenge when it comes to resale if there is no garage, though. We represented a seller of a property that had done a garage conversion into living space and everyone loved the house but would say, "But there's no garage. Where am I going to put all my stuff?"

[Twana Rasoul]

@Yuval Hala

I just finished getting permits for an ADU garage conversion here in San Diego on a multifamily property into a 1bed/1bath unit for $119,000 and 3 months to complete...I expected closer to $100k but I haven't really shopped for other numbers.

Accessory Dwelling Units do not add as much value for having a whole other rental unit on the property but it certainly is a great way to increase cashflow...for instance, I'd be spending $119,000 here in San Diego to build out a unit that will rent for $2,300/month.

ADUs don't currently count as an additional unit technically but depending on the zoning of the lot it is possible to get the value of another unit when trying to sell a property or refinance. Adding an ADU to a single family home on a multifamily zoned lot you can get the value of 2 units vs adding an ADU to a single family home on a single family lot gets valued less. Same goes for Multifamily....if you have a triplex on a lot zoned for 4 units and you add an ADU, you can likely convince an appraiser to appraise it as a 4 unit property because that would be the highest and best use of that lot.

[Bruce Woodruff]

Quote from @Twana Rasoul:

@Yuval Hala

I just finished getting permits for an ADU garage conversion here in San Diego on a multifamily property into a 1bed/1bath unit for $119,000 and 3 months to complete

Let us know if those numbers hold true once you're done. I'd expect they don't...

[Scott Mac]

The American Dream--Live in a Garage.

[Twana Rasoul]

@Bruce Woodruff I just had a client complete a 3 car garage into an ADU/Jr ADU. the 2 car garage is an adu and 1 car a junior adu and they actually only spent $106,000.00. this project finished last month. I can't imagine the contractor made money on that one...

You are correct, I wouldn't be surprised if construction costs end up higher than expected...every renovation I've done I have ended up going over....I was in commercial construction for nearly a decade before and the same roadblocks and issues show up whether on a $100M project or a $100k one.

I haven't decided on that quote I have yet as I expected that number to be lower. 

[Alex Otto]

@Yuval Hala

Here's my perspective (as someone whose company is more design-oriented and designs, permits, and construction manages garage conversion and ground up ADUs and JADUs across LA County -- in 2022 we had 30+ of these projects).

Permits
- Timeline will depend on where you are located in the county. Technically, the latest round of ADU bills should speed up permitting time everywhere (the bills say jurisdictions have 60 days to approve or deny), but I really don't think it's actually going to get faster because these departments are understaffed. This is especially true if you're in unincorporated LA County or in an anti-housing jurisdiction.

- LA City garage conversions are fast to permit (4-6 weeks once a plan checker is assigned) if your drawings are good and you aren't in any special districts (e.g. Hillside, Methane, HPOZ, etc. -- although even if you are in HPOZ, there's very little they can legally do to stop you do an ADU, especially if you aren't doing any substantial demolition, and there are ways around some of the hillside restrictions depending on where you are)

Cost

- It will depend on the condition of your garage's structure (footings, slab, wall framing, roof framing), the distance that's required for trenching, any electrical panel upgrades or location changes, and your design intent
- Check that your garage has footings that are deep enough below grade (12" min in LA City, 18"-24" elsewhere) -- if not, you'll need to underpin or rebuild them
- Check that you have concrete curbs, as these will help stop water intrusion from adjacent soil -- if not, you will want to find a way to add them, either by making the contractor do surgery on the building, or by adding them as part of a larger demo+rebuild strategy for the entire garage
- Look at your slab. Is it level and uncracked? If so, great. If not, you may have to repair/replace. Either way, adding a new topping slab is always helpful.
- Look at your roof. Is it flat, gable, or hip? Flat roofs, in our experience, are almost always too low and poorly built. Gable roofs are easy to remediate. Hip roofs take a bit more work to remediate. Additionally, if you want to vault the ceiling, gable is easier to do than hip roof.
- The numbers from @Bruce Woodruff are what we see on slightly more design-oriented projects (and that total number would include the fees we charge to do design, permitting, manage procurement, manage construction, etc.). The number from @Rick Albert sounds close if you are planning on self managing the project, but 90 days for building is not something we have ever seen.

City Fees
- You can contact the city and find these out. LA City has a permit fee calculator that will help. $2500-3000 for garage conversions in LA City, LA County, Pasadena, and South Pas is normal. Glendale is double that easily.  
- Remember that "city fees" really include plan check fees, planning dept fees, clearance fees, fees to issue the permit itself, etc.

Construction Time
- If your contractor is organized and working on multiple ADU jobs, 6 months is reasonable to get to punch list for LA City. Other jurisdictions can have very frustrating requirements for inspections (e.g. can only book 1 inspection at a time, can only book the next inspection when the current one is passed, min. 2 weeks to get an inspector out, etc.) that will slow down even the most organized contractor. Issues with utility companies can also cause 1+ month delays.

Value Added
- I see the same argument all the time from people outside of Los Angeles that ADUs don't add the same value as a typical residential unit. It is true that ADUs (especially garage conversion ADUs) are not SFRs -- they have different rules applied to them (like @Dan Heuschele's comment re: STR) and the utilities don't have to be cleanly separated from the main house's utilities -- but appraisers look to comps, and if there aren't comps for properties w/ ADUs, appraisers don't always know how to appraise them. We are seeing more and more that as more comps come online, the projects we work on end up getting pretty good appraisals. If the trend continues, I don't think there will such a huge penalty for ADUs vs SFRs in terms of added value, especially within LA.
- I think Dan makes a lot of great points, but following his advice in point 1, I have searched BP for ADU appraisals in LA City. There aren't many posts, and those that exist are old (2021 seems to have been a hot year for this question) and usually have the same people responding. I hope there will be more posts on this in the future with new people sharing the appraised value of their ADUs, and in the meantime, I would encourage you to be proactive about getting the value of your ADU appraised fairly if that's a concern for you.