Most people are surprised at what it costs to build a granny flat in San Diego. I come across articles all the time misstating the actual cost of construction. So let’s clear up the inconsistencies.
Download our free tool kit, which includes a free cost estimator, to give you a better idea what you will pay for your granny flat.
Cost Per Square Foot is Deceiving
Granny flats cost more per square foot than typical single-family homes because for several reasons.
- There are fixed costs associated with permitting and design fees.
- Margins are smaller for general contractors, subs, and architects.
- ADUs require new foundations, new walls, plumbing, electric, heating and cooling, and a separate roof, just like a regular house.
- There are no economies of scale. You know how you get a significant discount if you buy groceries from Costco because you’re buying in bulk? Building a tiny house is the opposite.
- Granny flats still require a bathroom and kitchen, which are ‘expensive’ square footage.
- Because the units are smaller the cost per square foot isn’t offset by extra bedrooms, large living rooms, and hallways you find in larger homes. This space is considered ‘cheaper’ square footage and brings the average cost per square foot down.
The cost per square foot of a granny flat can differ dramatically depending on the size and structural form. Here are some general rules of thumb you can keep in mind:
- The larger the unit, the cheaper your cost per square foot will be. Detached units can be up to 1,200 square feet unless specified by a local ordinance. A 1,200 square foot unit will probably be cheaper per square foot to build than a 450 square foot unit.
- Building up is more expensive. Most people instinctively want to build an accessory dwelling unit above their garage. If your budget is tight, stick to single-story. Building up will add ~$50/square foot to your project.
- A garage conversion is the cheapest way to convert space into a granny flat. If your budget is modest keep the existing envelope of the garage, meaning don’t expand on the current footprint. This will add extra cost.
Cost Per Square Foot to Build a Granny Flat in San Diego:
Most people’s units cost between $220-$350 a square foot.
Wow. The cost to build a granny flat in San Diego seems expensive.
The price tag on an accessory dwelling unit can scare people, but here’s a smart way to assess your investment.
- Look up the average value per square foot in your neighborhood. For example, in North Park, the average home sells for $526 per square foot.
- Let’s say you build a 435 square foot unit in North Park for $300 a square foot.
- You may spend $130,000 on your project, but you’re gaining close to $227,000 in value.
- That means you’re adding close to 100K in equity to your property plus, that doesn’t take into account the added value passive rental income brings.
- In North Park, a 1-bedroom apartment can rent for up to $1800 a month.
- (Check out the video above. This is a real example!)
Suddenly, the $130,000 price tag seems a lot more manageable, even savvy.
Granny Flats Are an Investment
To maximize your return on investment those who build a granny flat should plan to own their property for an extended period. The value passive rental income brings, especially in a city like San Diego, which boasts soaring rental prices is undeniable.
We’ve calculated that even a $100,000 garage conversion, maintained over a 30-year period can bring 1.5 to 2 million dollars in value between grossed rental income and property value increases. That’s a 15x return on investment.
Maximize Your Investment
If you do decide to build a granny flat build as large as your lot will allow. If you can comfortably fit 800 square feet in your backyard, I recommend our clients to do so.
The fixed cost.
Relative to what you’re already spending, adding 200 square feet won’t dramatically impact your budget, but it could significantly increase what you can charge for your rental. It could also be the difference between renting to a couple vs. a single-person unit or having a one-bedroom vs. two-bedroom granny flat.
Another way to maximize your granny flat investment is to create garden spaces. Gardens and outdoor area is a luxury most renters don’t have access to. In San Diego, a patio with an outdoor table can feel like a 2nd living room and be used all year long.
This is a very inexpensive space to create but can make your property much more desirable.