ADU Costs and a Proforma Worksheet

Although they are small in size, ADUs are still a large investment for most people that we work with. To make sure we understand priorities and how to best design within a budget, we start the design process by discussing the client’s wants and needs, and understanding the budget and goals for the project. Although the design process takes a significant amount of time, and it is difficult to know exactly what the construction costs will be when the design is permitted and ready to break ground, we try to design projects that are reasonably close to our client’s stated budgets.

At the same time, having clients that understand their financial goals and potential returns for these investments, makes these discussions easier. It is important that the people we work with have realistic expectations for the costs of ADU projects in today’s market, as well as understand what they should expect for potential rents and the revenue they can expect compared to the costs. Too often people come to us with expectations based on information that isn’t correct or that is out of date, which makes these early budget discussions difficult. Even just a few years ago it may have been possible to build an ADU for $125,00 to $150,000, while in today’s construction market it is difficult to get even a simple ADU built for less than $175,000.

To help you make a more informed decision, and have more realistic expectations, we have developed a tool to help calculate the costs and corresponding payback period and return on investment for ADU projects. This Proforma worksheet outlines the costs and ongoing expenses along with the revenue for an ADU rental unit. Although it doesn’t include fees and other costs for a loan product, it should give you a rough idea of what it takes to build an ADU and what revenue you can expect when it is complete. All you have to do is input some numbers based on your local market and the spreadsheet calculates the rest. It is a free download - just fill out the form below and a link to download the spreadsheet should appear:

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