What Really Affects the Cost of Hiring an ADU Builder?

6-minute read

Thursday, July 24, 2025

Thinking about building an Accessory Dwelling Unit (ADU) on your property? Whether it’s for rental income, multigenerational living, or a private home office, adding an ADU is a smart move for homeowners looking to maximize their space. But once you dive into the planning process, one question usually comes up first: How much will it cost to hire a builder?

The short answer? It depends. The long answer? Let’s walk through it together.

Here’s a practical breakdown of what really affects the cost of hiring an ADU builder—and how you can make informed decisions to stay on budget.

Take Action

The Size and Type of Your ADU

Design and Complexity

Your Location and Lot Conditions

Permitting, Fees, and Local Regulations

Labor Costs and Market Demand

Material Selection and Upgrades

Utility Connections and Infrastructure

Site Preparation and Unexpected Issues

How Much Should You Expect to Spend?

Ready to Build? We’re Here to Help

The Size and Type of Your ADU

Experience isn’t just about years logged—it’s about relevant expertise. Ask:
Not surprisingly, the larger your ADU, the more it will cost. A simple 400-square-foot studio will require far less in materials and labor than a 1,000-square-foot two-bedroom unit.

Also, the type of ADU you choose matters. A detached ADU (a standalone structure) is typically the most expensive since it needs its own foundation, roof, and utility hookups. Garage conversions and basement apartments can be more affordable if the structure is already in good shape.

Design and Complexity

A tiny house plan featuring a kitchen and living room, available for sale.

Custom design elements can quickly raise the overall cost. Simple, boxy layouts are easier to build and more affordable. But if you’re envisioning vaulted ceilings, custom cabinetry, skylights, or modern architectural features, your project will require more specialized labor and materials—meaning higher costs.

Choosing high-end finishes or complex floor plans? Expect to pay more.

Your Location and Lot Conditions

Where you live plays a big role in determining your ADU build cost. Labor rates, permit fees, and material costs vary by region. In states like California, for instance, the cost of hiring an ADU builder is generally higher due to stricter building codes and a more competitive labor market.

Your lot conditions can also affect pricing. If your land is sloped, has large trees, or poor soil conditions, your builder may need to spend more time (and money) prepping the site. Small or narrow lots may also require special equipment or techniques.

Permitting, Fees, and Local Regulations

Before construction begins, you’ll need to navigate permits, inspections, and local zoning rules. Permit costs vary by city and can range from hundreds to thousands of dollars. Some cities may have impact fees, utility connection fees, or other charges that can catch first-time builders off guard.

Additionally, properties in certain neighborhoods may be subject to HOA rules or historic preservation guidelines—both of which can add time and expense.

Labor Costs and Market Demand

Labor is a significant part of your ADU budget. If demand for skilled contractors is high in your area, expect bids to reflect that. Local cost of living, labor shortages, and seasonal trends all influence builder pricing.

Also, consider how you hire. A general contractor (GC) might charge more than coordinating subcontractors yourself—but they also manage the entire project, which can save you time and prevent costly mistakes.

Material Selection and Upgrades

Your choice of materials impacts more than aesthetics—it can make or break your budget. If you opt for luxury flooring, top-tier appliances, or custom lighting, the costs will add up quickly.

But there are many cost-effective alternatives that still offer style and durability. Many homeowners strike a balance by splurging on a few standout features while saving on less noticeable areas.

Utility Connections and Infrastructure

Connecting your ADU to electricity, water, and sewer lines can be a straightforward or complicated process. If your unit is far from existing utilities, trenching and running new lines will add to your costs.

Also, if your current electrical or plumbing systems can’t handle the additional load, upgrades may be required. These hidden infrastructure costs can surprise homeowners who haven’t built before.

Site Preparation and Unexpected Issues

Clearing the land, leveling the ground, and demolishing any existing structures all fall under site preparation. Sometimes these tasks are simple—but if surprises pop up (like old septic tanks, rocky soil, or poor drainage), your builder may need to adjust the project scope, timeline, and budget.

That’s why it’s essential to work with an experienced ADU builder who can assess your lot thoroughly before giving you a quote.

How Much Should You Expect to Spend?

On average, a professionally built ADU in 2025 can cost anywhere from $100,000 to $300,000+, depending on all the factors mentioned above. Simple garage conversions may fall on the lower end, while detached, fully customized builds land on the higher side.

Ready to Build? We’re Here to Help

At Small House Solutions, we specialize in designing and building high-quality ADUs. We handle everything—design, permitting, construction, and utility hookups—so you don’t have to juggle multiple contractors or guess your way through the process.

Whether you’re dreaming of a small guesthouse, a rental-ready unit, or a custom studio in your backyard, we’re ready to bring your vision to life.

Contact Small House Solutions today for a free consultation and personalized estimate.
Let’s talk about your goals, your property, and how we can help you build smarter—not just bigger.

Take Action

SERVING AUSTIN, SAN ANTONIO, HOUSTON
And Surrounding Areas

Small House Solutions Offers the Following Services at NO COST to You