Why the numbers vary so much
"ADU" covers an enormous range of projects. A garage conversion in a rural market is a fundamentally different proposition from a purpose-built detached unit in high-cost markets. The main variables: whether you're converting existing space or building new, your location and local labour costs, whether the unit needs its own utility connections, and whether you're owner-managing or using a general contractor.
The four types and what they cost
Cost ranges below show approximate US dollar and UK sterling figures. Costs vary significantly by location, specification, and market conditions — treat these as a starting framework, not a quote.
Garage or basement conversion: $40,000–$120,000 / £30,000–£90,000
The most cost-effective option in most markets, because the structure already exists. You're adding insulation, flooring, a bathroom, a kitchenette, and potentially HVAC. What people consistently underestimate: egress windows (often required by code), electrical panel upgrades, and a separate entrance that feels genuinely private.
Internal conversion: $60,000–$150,000 / £45,000–£110,000
Reconfiguring part of an existing home into a separate unit. Costs depend heavily on how much structural work is needed and whether plumbing needs rerouting. The big hidden cost: soundproofing. A conversion that's quiet enough to feel like two genuinely separate homes costs significantly more than one that isn't.
Attached conversion (new addition): $100,000–$250,000
A purpose-built addition extending the footprint of the house. Full construction costs apply. Permitting is more involved, but you get exactly what you design rather than working around existing constraints.
Detached conversion (separate structure): $150,000–$400,000
The most expensive and complex to permit. Requires its own foundation, roof, and typically its own utility connections. In high-cost markets, $300,000+ for a modest detached unit is not unusual once permitting, site prep, and contractor margin are factored in.
What builders don't always tell you
Permitting takes longer than you expect. In many jurisdictions, conversion permits take 3–6 months to approve. Factor this into your timeline.
Utility connections are a wildcard. Connecting a new unit to water, sewer, and electricity can cost $5,000–$50,000+ depending on distance and local requirements. Always get a utilities assessment before finalising your budget.
The quote and the final cost are different numbers. Construction overruns of 15–25% are common even on well-managed projects. Budget for this explicitly.
Does the construction cost make financial sense?
Two questions: First, break-even — how long before the monthly savings cover the construction cost? A $100,000 conversion saving $1,800/month breaks even in under five years. A $280,000 conversion saving $1,500/month takes over 15 years.
Second, property value impact: a well-executed conversion typically adds 60–80% of its construction cost to the property's market value. A $120,000 conversion adding $85,000 in value has a real net cost of $35,000 — which changes the break-even calculation significantly.
Before you call a contractor
Run the financial model first, then get planning advice, then get quotes. Get at least three quotes from licensed contractors and ask each to itemise the estimate. Ask specifically what's not included — the gap between the quoted scope and the finished project is where overruns live.