How To Build an ADU - A Step-by-Step Guide to Designing and Constructing Your Own ADU
ADUs are a great way to repurpose underused areas and create more living space in your home, perfect for renting out or housing a family!
Updated Jul 27, 2023
What is an ADU?
Accessory dwelling units, or ADUs, are an innovative and affordable way to add more livable space to your property. ADUs are secondary dwellings equipped with the essentials for independent living — it’s like having an apartment in your backyard, and you can use it however you wish. You can either attach an ADU to your home (attached ADU), convert a basement or garage (conversion ADU), or build one that is entirely separate from your home (detached ADU), depending on the specifics of your property, purpose, and budget.
ADUs are a resourceful way to create more livable space on your lot, and if you’re considering one, here’s how to get started on your project.
How to build an ADU
While the exact process varies depending on location and the type of ADU, here’s a general step-by-step breakdown of what goes into building an ADU:
Step 1 - Figure out your purpose
Setting clear goals from the start lays the groundwork for a successful ADU project. Your use case, ADU type, design goals, and budget will all impact what the ADU process looks like for you.
While ADUs are often used as additional living or working space, many ADU owners also rent out their units to make additional income. If that’s also your goal, consider the market demand in your area, the potential rental rates for different types of ADU, and how you can tailor your ADU to generate the most long-term value.
Creating a clear plan for your ADU use case will help you make informed design decisions and set your project up for success from the start.
Step 2 - Find the right ADU type for you
There are a number of ADU types to choose from depending on your property and intended use case. Here are some common ADU types to consider:
Detached ADUs stand separately from your main residence, offering more privacy and flexibility for design and layout. This option is perfect if you’re looking to maximize privacy or rent out your ADU.
An attached ADU is physically connected to your primary residence, meaning it shares one or more walls with your main home. This allows you to maximize your lot space and provides easy access between your home and the ADU.
Garage Conversion ADU
If your garage is in good structural condition, converting it can help you save time and money.
Take a look at this 240 sq. ft. Cottage floor plan recommended for a garage conversion ADU.
Above Garage ADU
Building an ADU above your detached garage creates more living space while preserving the functionality of your garage.
Basement Conversion ADU
If you have an existing basement, converting it into an ADU can be a cost-effective approach.
Junior ADU (JADU)
JADUs are under 500 sq. ft. and are ideal if you have limited space to work with. They allow for efficient kitchens and aren’t required to have their own bathroom.
Before making a decision, consider the characteristics of your property such as available space, current home design, and the purpose of your ADU.
Prefabricated (also known as prefab) ADUs have a significant portion of the ADU assembled in a factory which is then installed in your lot. Custom ADUs, on the other hand, are constructed on-site from the ground up.
While prefab ADUs can be installed with minimal onsite work, they offer very limited customization. To build an ADU that’s perfectly tailored to your needs and goals, choose to go the custom ADU route. Custom ADUs provide significantly greater flexibility, personalization, and lasting quality.
Designing and permitting can take between 4-6 months depending on your municipality. Construction usually takes the longest, and depending on the type of your ADU, typically takes 4-6 months to complete.
Keep in mind that these rough estimates may vary depending on your project requirements. Unexpected delays, such as weather conditions or unforeseen construction challenges also have an impact, but working with an experienced ADU provider like Cottage will help you estimate a realistic timeline for your project and keep it moving along.
Different cities and regions have varying guidelines regarding ADUs, so it’s important that your provider is familiar with local ADU regulations right from the start. Here’s a quick look at the regulations in these metro areas:
Cash-out refinancing allows you to get a loan against the equity you have in your home. You’re essentially refinancing your existing mortgage for a higher amount than what you currently owe, and this can fund your ADU project.
Similar to refinancing, this method also allows you to incorporate the ADU construction costs into your mortgage.
Home equity loans or lines of credit:
By using the equity you have in your home as collateral, you can receive a loan upfront and repay it over time with fixed monthly payments.
You could also opt for a home equity line of credit (HELOC), which provides you with a line of credit that you can draw from—similar to a credit card.
Home equity investments:
This approach involves investors providing the upfront funding in exchange for a share of the future appreciation or rental income of the ADU. This way, you can begin your project without relying on only your cash reserves.
Many homeowners insurance providers will insure your ADU, but remember to review your insurance policy before starting your project. You may also need to purchase additional coverage to insure your ADU against potential damages and theft.
Consult with a financial advisor to assess the most suitable ADU financing option based on your budget and goals.
Step 7 - Get your loan pre-approved
Compare loan terms, interest rates, and repayment options to make sure you’re getting the best deal, and choose a provider with transparent policies and proven experience in ADU financing.
Once you have assessed the costs and explored financing options for your ADU project, it's recommended to get your loan pre-approved for a clear understanding of your financial capacity.
They may require your proof of income, employment details, tax returns, bank statements, and credit history to apply.
Step 8 - Pick the right ADU company
Choosing the right provider is your best bet to ensure your ADU meets your needs, fits your budget, sticks to a timeline, and finishes smoothly. Here are a few areas to consider when narrowing down your list of options:
They come recommended with good reviews
They specialize in ADUs
They have a track record of successful ADU projects
They are licensed and insured
They have a trusted network of contractors
They are familiar with local ADU laws and regulations
Before making your final decision, try to get estimates, compare pricing, and consult with experts. Not every project is the same, and it’s important to make sure that the ADU meets all your goals. At Cottage, we prioritize your goals and provide transparent pricing, licensed ADU contractors, and a dedicated team of ADU experts to ensure you get your dream ADU. Here are some of our past ADU projects to get a better look at how we commit to supporting your project.
Step 9 - Design your ADU
This is an exciting step! To design your ADU, work with a professional architect and designer to bring your vision to life. Your designer will optimize your ADU’s size, orientation, floor plan, and style to meet your goals. They can also select an exterior to ensure your ADU complements the style of your main home or neighborhood. During this step, you’ll also choose your finishes including flooring, countertops, tile, kitchen appliances, and more. Consider an ADU provider like Cottage that provides a custom design process and a dedicated designer for your project.
Step 10 - Obtain permits
The permitting process is required to ensure your ADU meets all the legal requirements set by your local planning department. Here's what you need to know:
Building and zoning permits are required, and can usually be based on factors such as the size, location, and valuation of your ADU.
City fees are required in some areas in addition to building permits.
Experts like Cottage’s dedicated permitting team can make sure you are in compliance with the specific regulations of your city, and help you obtain all necessary permits for a hassle-free process.
Step 11 - Construction
It’s time to break ground! It’s critical to choose a contractor that is experienced with ADUs and can get the job done right.
After site preparation, excavation, and foundation work are taken care of, your contractor can start to build. Once your ADU takes shape, mechanical, electrical, and plumbing (MEP) work can be completed to ensure it is fully functional and ready to use. MEP work includes HVAC, wiring, and drainage systems... From there, your ADU will really come to life as your contractor adds drywall, flooring, tiling, countertops, and the rest of your finishes. To choose the right contractor, work with a company like Cottage, which pairs you directly with a vetted builder with deep ADU experience.
Your provider will also carry out regular assessments during this stage and will make sure your ADU complies with building codes and standards.
Step 12 - Move in!
It’s time to move in! After adding all the furniture and decorative elements you want, your ADU is now ready to be enjoyed as an additional living space.
ADUs have become more popular over the years with all the benefits they bring to both homeowners. They are budget-friendly, resourceful, and create more livable space on your lot to make use of the available property to the maximum.
How can Cottage help you build your own ADU?
With the help of a dedicated team of ADU specialists, you can build a customized ADU that meets your vision, fits your budget, and makes the best use of the space you have. Cottage guides you through every step of the ADU process. Get in touch today for a free consultation to get started on your project!
How much does it cost to build an ADU?
On average, an ADU may cost between $200,000 to $400,000 and are usually more affordable than traditional single-family homes.
The cost of an ADU depends on factors such as the size, the level of customization, the location, and the complexity of the project. Larger ADUs or those with high-end finishes may cost more than smaller ones with more basic designs.
To get a more accurate estimate for your project, consult an experienced ADU company like Cottage that can provide detailed cost breakdowns based on your specific requirements.
How much value does an ADU add to a house?
In Los Angeles, San Diego, San Francisco, Seattle, and many other regions in the US where ADUs are in high demand, homeowners can expect an average increase in their property value between 24%-30% with the addition of an ADU. Apply this simple equation to get a rough estimate of added value for your ADU.
(Current value/sq. ft.) x sq. ft. of proposed ADU
Do note that this value increase varies based on location, size, design, and market conditions.
To get more accurate information regarding property tax changes, reach out to your local tax assessor's office or consult a tax professional.
Can you build a two-story ADU in California?
It is possible, but it's best to consult the local authorities to know the specific regulations in your area because there isn't a statewide policy in California for two-story ADUs. You have to adhere to the specific regulations and guidelines applicable to your location, including any restrictions on height, setbacks, and design.
How to get money to build an ADU?
If you prefer not to pull out your savings for your ADU project, here are some financing options to choose from:
Home equity lines of credit (HELOC)
Home equity investments
Consult with an advisor and make sure you have a clear idea of interest rates, terms and conditions, payment options, and other important aspects when choosing a financing method for your ADU.
Can an ADU be leased or rented?
Yes, an ADU can be leased or rented. Short-term rentals typically aren’t allowed in most areas, but long-term rentals are a great way for homeowners to earn a stable source of passive income while adding housing for the community.