How much cash do I need to build an ADU?

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How much cash do I need to build an ADU?

Michael Hyun
Investor · San Jose CA · Member since 2018 · 114 posts · 73 votes

CAn someone explain how much actual CASH I need to build an ADU in the Bay area? How much can I finance? Can someone give me a ballpark amount of cash I'd need?

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Michael Williams
Rental Property Investor · Sacramento, CA · Member since 2017 · 202 posts · 82 votes
4y

In the Bay Area, you can expect a 650-square-foot ADU to cost around $350,000 on average to construct where a 350-square-foot ADU will likely cost around $225,000 to build. Of course, your costs may be more or less, depending on what you want for your accessory dwelling

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  • Yi Chung Chen
    Member since 2018 · 57 posts · 26 votes
    4y

    my own experience, on the low end:

    arch/designer: $2k
    structural eng: $2k
    Permit fees: $10k
    construction cost (labor+material): $350/sqft

    So you're looking at $200k minimum for a 450sqft ADU, but I've gotten quotes as high as like $450k.

    don't know about financing, I just did cash..

    3Reply
  • Michael Williams
    Rental Property Investor · Sacramento, CA · Member since 2017 · 202 posts · 82 votes
    4y

    In the Bay Area, you can expect a 650-square-foot ADU to cost around $350,000 on average to construct where a 350-square-foot ADU will likely cost around $225,000 to build. Of course, your costs may be more or less, depending on what you want for your accessory dwelling

    3Reply
  • Michael Hyun
    OP
    Investor · San Jose CA · Member since 2018 · 114 posts · 73 votes
    4y

    @Michael Williams thanks for the rough estimate. What kind of financing options are out there for ADUs? 25% down? Less down? What about DTI restrictions?

    1Reply
  • Delbert Standifer
    Rental Property Investor · Carson, CA · Member since 2019 · 185 posts · 74 votes
    4y

    @Michael Hyun I've been going through the same thing of trying to find financing for an ADU. The prices are going up rapidly.

    1Reply
  • Jonathan Le
    Member since 2021 · 3 posts · 3 votes
    4y

    You're right. Prices are going up very fast. I'm in socal and last year it was $140/ sq ft. Now it's $200-250/ sq ft.

    My costs for my current 1200 sq ft ADU close to permit sign off.

    $6k architect fee, $18k permit, $12k solar, $200k construction, $5k school fee, $8k concrete pour around the house once done. 

    i don't know lenders that'll loan on it but for me I just did a cash out refi. Or heloc/ borrow then refi cash out later if you want. 

    3Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    4y

    @Michael Hyun following

    1Reply
  • Patrick Collins
    San Francisco, CA · Member since 2021 · 11 posts · 6 votes
    4y

    @Michael Hyun It is very important that property owners understand the costs of building an ADU to properly evaluate their projects, so I thought it would be helpful to share some of our recent projects in the Bay Area for reference. Three of our projects below show how much the market prices have increased from the start of 2020 to now.

    Detached ADU in Livermore - 1,000 sq ft, $235k - Completed Spring 2020

    ADU Interior Living Room Image1,000 sq ft, 3bd, 2ba ADU in Livermore, CA

    Detached ADU in Walnut Creek - 850 sq ft, $275k - Completed Fall 2021

    ADU Exterior Entryway Image847 sq ft, 1bd, 1ba ADU in Walnut Creek, CA


    Detached ADU in South San Francisco - 750 sq ft, $370k - Completed Fall 2021

    ADU Exterior Under Construction729 sq ft, 2bd, 1ba ADU in South San Francisco, CA
    3Reply
  • Maria D'Aura
    Real Estate Agent · Livermore, CA · Member since 2016 · 173 posts · 74 votes
    4y

    I would think a cash out refi would get you the best rates and least amount of hoop jumping. However, I'm following this thread because I'd like do know of other options too. 

    1Reply
  • Michael Williams
    Rental Property Investor · Sacramento, CA · Member since 2017 · 202 posts · 82 votes
    4y
    Originally posted by @Michael Hyun: 

    The best way to finance an ADU is a RenoFi Renovation Home Equity Loan, as it factors in the value of a property after the ADU is built, greatly increasing the average homeowner's borrowing power. If you have equity in your home you could get a line of credit on the house. Also a homestyle renovation loan, you could consider a 2nd position construction that will cover the building costs.
      An ADU has to be less than 16 feet tall. And if your ADU is below that 16 foot height and is under 750 square feet, its building permits can't be blocked. If you're building an ADU within a home or existing building, the ADU can max out at the maximum height of the existing structure.


      @Michael Williams thanks for the rough estimate. What kind of financing options are out there for ADUs? 25% down? Less down? What about DTI restrictions?

      1Reply
    • Brian Larson
      Investor · San Jose, CA · Member since 2018 · 313 posts · 230 votes
      4y

      @Michael Hyun - I built a detached 2-car garage with a 1 bedroom apartment above in San Jose.  Check out this link for more details.

      https://www.biggerpockets.com/...

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