Building an Accessory Dwelling Unit (ADU)—often called a granny flat, in-law suite, or backyard cottage—is one of the most significant and rewarding home improvement projects you can undertake. It can provide housing for aging parents, create a source of rental income, or simply offer a quiet, separate workspace.
However, an ADU is not a DIY weekend project. It is building a second house on your property, and it requires careful planning, budgeting, and navigation of local bureaucracy. Here is a comprehensive guide to planning your ADU project from start to finish.
1. Define Your Purpose and Budget
Before drawing any plans, you need to know why you are building an ADU, as this will dictate its design and cost.
- Define the Use Case: Who will live there? An aging parent might need an accessible, single-story layout. A long-term renter will expect a full kitchen and laundry. In some forward-thinking cities (like San Jose), you may even be able to sell the ADU separately as a condo, which changes the investment strategy entirely.
- Set a Realistic Budget: In high-demand markets like the Bay Area, construction costs are steep. As of 2025, you should typically budget $350 to $500+ per square foot. A standard 500-sq-ft unit can easily cost $200,000 to $250,000 once you factor in permits, site prep, and finishes.
- Explore Financing: Common methods include Home Equity Lines of Credit (HELOCs), construction loans, or "cash-out" refinances.
2. Feasibility and Zoning Research
This is the most critical step. You must determine if you are legally allowed to build an ADU on your property and what constraints exist.
- Check the "Universal" Rules: While every lot is different, current regulations generally allow detached ADUs up to 1,200 square feet (or 1,000 sq ft for smaller lots).
- Know Your Setbacks: You typically need to keep the structure at least 4 feet away from your rear and side property lines.
- Height Limits: Most single-story detached ADUs are capped at 18 feet in height. If you want two stories (up to 24 feet), you usually need to meet stricter setback requirements to preserve neighbors' privacy.
- Solar Mandate: Keep in mind that for new detached ADUs in California, installing solar panels is generally mandatory, so factor that into your budget.
3. Assemble Your Team
Unless you are a licensed professional, you will need a team to design and build your ADU.
- Pre-Approved Plans (The Shortcut): Many cities now offer a library of "Pre-Approved ADU Plans" from specific vendors. Using one of these can shave months off your permit wait time (sometimes getting approved in as little as 30 days) because the city has already reviewed the building code compliance.
- Architect/Designer: If you go custom, look for a professional who specifically knows local ADU codes. They can help you navigate tricky site conditions like slopes or mature trees.
- General Contractor (GC): Get bids from at least three contractors who have built ADUs before. They will manage the subs (plumbers, electricians) and the inspection schedule.
4. Design and Permitting
Now the fun part begins: turning your ideas into blueprints.
- Design for Privacy: Since you are building in a backyard, window placement is key. Use clerestory windows (high up on the wall) to let light in without staring directly into your main house or the neighbor’s yard.
- Submit for Permits: Your team will submit plans to the building department. Be prepared for a wait—custom plan checks can take 4 to 8 months depending on the city's backlog.
- The "ADU Ally": Check if your city offers a dedicated "ADU Ally" or help desk. They can often help unblock stalled permits or clarify confusing zoning questions.
5. Construction
Once you have the building permit in hand, construction can begin. This phase typically lasts 6 to 12 months.
- Site Prep & Utilities: The site is cleared and trenched. Note that if you are far from the street, trenching for sewer and water can be a surprisingly large line item.
- Framing & Inspections: The skeleton goes up, followed by rough plumbing and electrical. City inspectors will visit at key milestones.
- Finishes: Once walls are closed, the fun begins—installing cabinets, flooring, and fixtures.
6. Final Inspection and Move-In
When construction is complete, a final inspection is required to get your Certificate of Occupancy.
- Registration: If you plan to rent the unit out, you may need to register it with a local housing registry.
- Address Assignment: Your ADU will typically get its own distinct address (e.g., "123 B Main St") to separate mail and utilities.
Planning an ADU is a marathon, not a sprint. By doing your research upfront—especially regarding those strict setback lines and solar requirements—you can avoid costly surprises and add incredible value to your property.