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What Is the Cheapest Option for an ADU in California? A 2025 Guide to Building Smart on a Budget

Accessory dwelling units (ADUs) are becoming one of the most cost-effective solutions for homeowners across California. Whether you’re looking to generate rental income, create extra living space for family members, or boost your property value, building an ADU can be a smart investment.

But there’s one question we hear almost every day from clients across Sacramento, San Francisco, and surrounding cities: what is the cheapest option for an ADU in 2025?

At Golden State ADUs, we specialize in helping homeowners budget wisely and build quality ADUs without overspending. In this guide, we’ll break down construction costs, ADU types, cost-saving strategies, and how to get the most affordable ADU without cutting corners. If you’re considering an ADU project, these insights will help you make informed decisions from start to finish.

How Much Does It Cost to Build an ADU in California?

Before you can determine the cheapest option, it’s important to understand average ADU construction cost in today’s market. In 2025, ADU costs in California typically range from $125,000 to $500,000 depending on the type of unit, square footage, and complexity of the construction project.

Several factors impact your final cost:

• Type of accessory dwelling unit (garage conversions, attached, detached, prefab)
• Construction time and scope
• Material costs and labor costs
• Permitting process, including local zoning laws and necessary permits
• Site preparation, grading, or utility connections
• Local building codes and energy efficiency requirements

While ADU costs can vary widely, the good news is that cost-effective options are available for homeowners who plan ahead and consult experts.

What Is the Cheapest Type of Accessory Dwelling Unit?

The most cost-effective option for an ADU often depends on what’s already available on your property. Here’s how the main types of accessory dwelling units compare in 2025.

Garage Conversions

Converting an existing garage is typically the cheapest way to build an ADU. If the structure is in decent shape, you can save significantly on construction costs by reusing foundations, walls, and roofs.

Average cost: $75,000 – $150,000
Size range: 250 – 500 square feet

Why garage conversions are cost-effective:

• Leverage existing structures and existing utilities
• Fewer materials and less labor
• Simplified permitting process in many cities

Garage conversions offer homeowners a practical solution for creating extra living space with relatively low upfront investment. They’re ideal for a studio or one-bedroom unit and can offer natural light with the addition of large windows or sliding doors.

Attached ADUs

Attached ADUs are built as extensions of your main house, sharing at least one wall. They tend to be more affordable than detached units because they use shared utility lines and require less framing.

Average cost: $150,000 – $250,000
Size range: 400 – 800 square feet

Cost savings are possible through shared systems, reduced trenching, and affordable materials. This type of ADU can also offer greater access to natural light if designed with a smart layout and large windows.

Detached ADUs

Detached ADUs are free-standing units built on your lot. These are typically the most expensive due to the need for a new structure, additional site preparation, and separate utility connections.

Average cost: $200,000 – $500,000+
Size range: 400 – 1,200 square feet

However, detached units offer privacy, flexibility, and the highest potential for rental income. If your property allows for it, a prefab ADU may help reduce costs while still offering many benefits.

Prefab and Pre-Built ADUs

A prefab ADU or pre-built unit is constructed off-site and delivered to your property for installation. This can result in lower labor costs, fewer delays, and faster construction time.

Average cost: $175,000 – $350,000
Size range: 300 – 800 square feet

While they’re not always the cheapest option, prefab ADUs can offer predictable pricing and shorter timelines. They’re a strong choice for homeowners in urban areas who want to build quickly without sacrificing quality.

Cost-Saving Strategies for Affordable ADU Construction

Whether you’re building from scratch or converting an existing structure, these strategies can help you cut costs without cutting corners.

1. Build Small and Keep It Simple

One of the easiest ways to reduce your ADU construction cost is to build a smaller unit with a simple layout. Studio and one-bedroom designs between 300 and 500 square feet offer the best balance of affordability, comfort, and function.

A simple rectangular design with fewer corners also reduces material costs and construction time.

2. Optimize Existing Structures

If you already have an existing garage, workshop, or accessory building, converting it into an ADU can yield huge cost savings. You’ll avoid pouring new foundations and reduce the need for structural framing.

Reusing available space also speeds up the construction process, saving both time and money.

3. Design for Energy Efficiency

California’s building codes now require new construction to meet high energy efficiency standards. Investing in energy efficient appliances, insulation, and solar panels can result in long-term savings on utilities.

At Golden State ADUs, we help clients design for maximum comfort while meeting all local regulations.

4. Work With a Design-Build Team

A unified design-build approach helps you avoid miscommunication and unexpected construction costs. Our in-house team handles everything from permitting to construction, giving you one point of contact and a fixed budget from the start.

This approach helps eliminate delays, streamline the construction project, and minimize other costs.

What’s Included in Your ADU Construction Costs?

Understanding what is and isn’t included in your ADU costs is essential for planning your budget. Here’s a breakdown of typical expenses:

• Design and Planning: Architectural drawings, Title 24 reports, engineering
• Permitting: City fees, utility hook-up charges, impact fees
• Site Preparation: Excavation, grading, utility trenching
• Construction: Framing, insulation, electrical, plumbing, HVAC
• Finishes: Cabinets, countertops, flooring, lighting
• Compliance: Fire sprinklers, seismic upgrades, local building codes

Make sure to get a detailed estimate early and discuss other costs like landscaping or driveway expansion that may impact your final ADU project total.

Financing Options for Your ADU Project

Even with a cost effective plan, building an ADU requires upfront capital. Fortunately, California homeowners have several financing options available:

• Home equity loans or home equity lines
• Personal loans for smaller garage conversions
• Low interest loans through credit unions or banks
• ADU-specific programs from cities like San Francisco
• Various financing options offered through lenders partnered with your builder

Our team can help you explore the best option based on your credit, goals, and budget.

Real Examples of Affordable ADU Projects

Here are some budget-friendly ADU examples we’ve designed and built in Sacramento and surrounding areas:

Sacramento Garage Conversion | $115,000

Converted a 400 sq ft existing garage into a studio ADU. Retained existing walls, added a mini-split system, kitchen, and full bathroom. Met all local zoning laws and building codes with minimal structural changes.

Folsom Prefab ADU | $180,000

Installed a 450 sq ft prefab ADU on a flat lot with direct access to existing utilities. Chose affordable materials and a pre-approved design, leading to a faster permitting process and reduced construction time.

Elk Grove Attached ADU | $200,000

Built a 500 sq ft addition attached to a single family home. Shared utility systems and minimized exterior finishes for a cost effective yet functional layout. Included energy efficient appliances and optimized space feel with plenty of natural light.

FAQs About the Cheapest ADU Options

What is the cheapest way to build an ADU in California?

Converting an existing garage is usually the most cost-effective option. With a solid structure in place, you can save on material costs, labor, and permitting.

Is an ADU worth it for my property?

Yes. An ADU can increase your property value, generate rental income, and offer extra living space for family members. Over time, it pays for itself, especially when built cost effectively.

Can I build an ADU for under $100K?

In select cases, yes. Small garage conversions with minimal upgrades can cost less than $100K, especially if you already have plumbing and power nearby.

How do I avoid going over budget on an ADU project?

Work with a licensed general contractor, choose a pre-approved ADU plan, and keep your layout simple. Clear communication and upfront planning prevent surprises.

What size ADU is the most affordable?

Units under 500 square feet tend to be the most affordable. Studios and compact one-bedroom layouts offer the best mix of livability and budget control.

Build Smart, Build Affordable With Golden State ADUs

If you’ve been wondering what is the cheapest option for an ADU, we hope this guide has provided valuable insights. Whether you’re considering garage conversions, a prefab ADU, or a custom build, the key to cost savings is smart planning and experienced guidance.

At Golden State ADUs, we help California homeowners build accessory dwelling units that are beautiful, legal, and financially smart. Our design-build process means fewer surprises, faster timelines, and a better return on investment.

Ready to explore your most cost-effective ADU option? We’ll assess your available space, evaluate your budget, and show you how to build an ADU that adds long-term value to your property.