A granny flat (ADU) in Orange County typically costs $120,000 to $150,000 for a garage conversion or $180,000 to $400,000 for a detached new build, at roughly $350 to $400 per square foot. These units add rental income or space for family, and California law makes them easier to build than ever, so a good ADU contractor can guide you through it. Here’s the complete guide to building a granny flat in Orange County.
Everything You Need To Know About ADUs and Garage Conversions in Orange County
Ever envisioned a backyard haven or transforming that old garage into something extraordinary? Say hello to ADUs, Accessory Dwelling Units, also known as granny flats. In recent years, homeowners in California, especially Orange County, have been buzzing with ADU excitement. Why? The state has lifted major restrictions, opening the door to endless possibilities for building ADUs. This newfound freedom in ADU construction has sparked major interest, inspiring homeowners to reimagine their spaces.
Join the movement as we explore everything you need to know about ADU Orange County.
Here at GreatBuildz, a free service that personally matches homeowners in Los Angeles, Orange County, Ventura or San Diego with reliable general contractors, we talk to homeowners every day about their ADU and garage conversion projects – here are some key points to know.
Key Takeaways
- Recent changes in California regulations have made building Accessory Dwelling Units (ADUs) more viable.
- The cost of ADUs varies, ranging from $90,000 to $400,000, depending on factors like size, design, and location.
- Selecting a local, licensed ADU contractor with relevant experience is important.
California State ADU Law Changes for 2024
First off, you need to be aware of the latest rules & guidelines that have recently gone into effect to make accessory dwelling units truly viable for many Orange County homeowners. The state of California wanted to help assuage the housing crisis and, therefore, has required all cities to reduce local restrictions on building ADUs.
The below regulations have been passed at the state level, so be aware that every city in Orange County will approve its own specific set of guidelines, based on these latest changes. You must check with your Planning Department staff about specific guidelines and restrictions that apply to you.
- Increased the maximum size of ADU allowed
- Allowed ADUs on all single-family properties, with no minimum lot size requirement
- Allowed ADUs on multi-family properties
- Allowed different types of ADUs – detached, attached, garage conversion, second-story
- Reduced setbacks for ADUs to rear/side property lines to 4 feet
- Waived or reduced impact fees in some cases
- Allowed ADUs to be used as rental units for a tenant
- Stipulated that local HOA/CC&Rs cannot restrict building ADUs
- Parking – ZERO parking is required for ADUs in many cases, as long as the home is within 1/2 mile from any transit stop.
- City approvals – ADUs and garage conversions, in most cases, don’t require any city approvals. You don’t need approvals from the city planning dept, neighbors, planning boards, etc, as long as your plan meets the city guidelines. Building an accessory dwelling only requires submitting building plans to the building department and going through the plan check process to get a building permit.
Each city in Orange County is creating its own unique rules that generally follow the State’s ADU laws, but each will likely have its own specific differences. We have provided resources to all Orange County city’s ADU guidelines at the end of this article.
New ADU Laws for 2025
SB 1211
Starting in 2025, SB 1211 changes the ADU rules for multi-family property owners in a big way. Right now, the law lets most multi-family properties have two detached ADUs, but SB 1211 boosts that limit up to eight. The only restriction is that the number of ADUs can’t be more than the existing units on the property.
This law lets owners use their space more efficiently if they have room to add extra units. It also loosens parking requirements, so ADUs can be built on current parking spots (covered or uncovered) without needing to replace them elsewhere.
Another bonus of SB 1211 is that it restricts local governments from putting strict development or design standards on ADU builds. It also clarifies that “habitable space” means areas intended for living, like bedrooms, living rooms, and bathrooms.
AB 2533
AB 2533 is for property owners with unpermitted ADUs or garage conversions that were built before January 1, 2020. This law says local building departments must help these owners get permits for those units, as long as they meet basic health and safety standards. Local agencies now have to provide a checklist of repairs or upgrades needed to meet code, and owners can hire private inspectors for cost estimates.
A nice perk: AB 2533 stops local agencies from charging impact fees or connection fees on these unpermitted units if no new utility connections are needed, which helps keep costs down.
SB 1077
If you’re in California’s Coastal Zone, building an ADU has usually been tougher because of regulations from the California Coastal Commission. SB 1077 requires the Commission to give local governments clear guidelines on making their coastal programs ADU-friendly. This change is supposed to happen by July 1, 2026, so ADU building near the coast should be easier and more straightforward.
What kind of ADUs are there?
There are generally two options for a granny flat: either building a new free-standing unit in the backyard or converting an existing garage to an ADU.
A garage conversion is the most cost-effective choice because the basic garage structure already exists. The downside could be the size – most garages are usually 300-400 square feet. This is still large enough for a ‘studio’ or a small one bedroom space with both a kitchen and bathroom. It’s cost-effective because the ’bones’ of the structure already exist, including the slab, exterior wall, roof, etc.
A newly built ADU in Orange County can be in one of a few forms. It can be attached to the main home, attached to a detached garage, or fully detached. It can be one or two stories and usually has a maximum height of 25 feet, though in some cases, height may be limited to only 16 feet. It will be located in the backyard or side yard and not in front of the main residence. Some homeowners have even built an ADU above their existing garage.
A new detached ADU can be a maximum of 1,200 square feet in size. A 400-600 square foot ADU is good for a one-bedroom unit and a 600-1,200sf structure can be to be up to three bedrooms and two or three baths with one or two stories.
Why build an ADU on your property?
Many people are excited about the new rules and guidelines and are exploring the possibility of building an ADU on their lot, but why?
It comes down to two things: the ability to add living space to their property and the tremendous variety of potential uses of an accessory dwelling unit.
Adding space to a home previously meant building an ‘addition’ or second story, which can be difficult. It was costly and time-consuming, it required changes to the layout of your home, and it meant living with the dust & chaos of construction in your home. In some cases, such as adding a second story, the homeowners would have to move out of the house for an extended period of time during construction.
An ADU solves these issues and allows for a lot of flexibility. Homeowners are building them as extra space (a dedicated office or a guest house), a music or yoga studio, a mancave or she-shed, or a separate home for retired parents or post-college kids. Because an ADU has both a kitchen & a bathroom, it can always function as its own separate living space.
In addition, homeowners may also use them as rental units for additional income. We’ve also witnessed several retired homeowners build an ADU so they can move into it (to downsize) and rent out their primary residence as a source of retirement income. That’s pretty smart. Orange County rental rates are at historic highs, so people are seeing really great cash flow by renting their ADU.
If you’re planning to build an ADU for the purpose of renting it to a tenant, there are a few important things to think about. First, you may want to seriously consider building a slightly bigger ADU to fit two or three bedrooms into the unit. An ADU bedroom might be reasonably small – say 100sf – so it won’t make the ADU much bigger, but it will enhance the rental rate. To maximize rents, you’ll want to consider including a laundry closet in your ADU and creating some fenced-off private patio space for the dwelling.
Legal Considerations for ADU Rentals
As I’ve said, renting out ADUs presents homeowners with a lucrative opportunity, but handling the legal landscape is important. Understanding the legal considerations for ADU rentals ensures a smooth landlord-tenant relationship and compliance with regulations. In Orange County, California, and beyond, several key aspects demand attention:
- Tenant rights and fair housing laws: This includes creating lease agreements that adhere to legal standards and clearly outline the rights and responsibilities of both parties. Complying with anti-discrimination laws is critical.
- Local zoning ordinances and ADU regulations: Each city within Orange County may have specific guidelines governing ADU rentals, covering aspects like unit size, parking requirements, and rental duration. Remaining in compliance with these regulations is important to avoiding legal complications.
- California rental laws: Homeowners should consider consulting legal professionals or property management experts to ensure their lease agreements align with California rental laws. It’s also essential to understand eviction laws, security deposit regulations, and the process for handling repairs and maintenance.
- Tax implications: Reporting rental income accurately and understanding available deductions can help maximize financial benefits while steering clear of legal pitfalls.
How much does an ADU in Orange County cost?
The ADU cost in Orange County will vary depending on design, options, and size.
As discussed, the most cost-effective version is a garage conversion to an ADU. The major structural components already exist in a garage, but this conversion requires items including constructing or adding:
- The fourth wall (where the garage door is currently)
- Interior walls
- Kitchen
- Bathroom
- Flooring
- Doors and windows
- Plumbing
- Electrical
- HVAC
- Insulation
- A new waste line to the sewer lateral
The garage conversion to ADU cost commonly ranges from $120,000 to $150,000, depending on location and the homeowner’s desires. Building an ADU above a garage will be more expensive because the garage needs to be structurally reinforced to support the weight above. Costs to construct a ‘ground-up’ new ADU will vary considerably based on size, the number of stories, location, access, etc, but will often be in the $180,000-$400,000 range.
A good rule of thumb is to assume $350-$400 per square foot – and the bigger the unit, the lower the cost per square foot. If you’re considering building a 2-story or second-story ADU, costs will also go up.
What is the price of a prefab ADU?
Prefabricated or modular ADUs have received considerable attention recently. The majority of these homes are produced at a factory, transported to your location, and assembled there. Numerous new companies have sprung up to produce these prefabricated ADUs, which frequently come with multiple floorplans and design options. Some are ultra-luxurious and pricey, while others are designed for budget-conscious buyers.
Prefabricated ADUs have both advantages and disadvantages in comparison to typical ADUs constructed on-site by general contractors. Cost-wise, they may first appear to be less expensive than traditionally constructed ADUs, but it’s important for consumers to consider ALL the costs (not just the unit itself), including taxes, shipping, craning, assembly, installation, permits, utility connections, and foundations.
Related: Pre-fab vs. Stick Built ADUs: Which is Better?
How do I pay for an ADU?
There are several ways to finance an accessory dwelling unit project.
Of course, homeowners can pay for it from their own savings, which is most common. They can also finance this project with a home equity line of credit, a construction loan, a cash-out refi, or a home renovation loan, which offers a quick processing timeline but does come with a higher interest rate, from a company like Lightstream or SoFi. There is another company called Renofi, which offers a renovation loan that allows homeowners to borrow more for their projects as they base their loan amount on post-remodeled home value.
If you’d like a deeper analysis, I’ve written about this topic in greater detail in the following article: https://www.greatbuildz.com/blog/adu-financing-guide-los-angeles/
Insurance and Tax Considerations of an ADU
Insurance: Notify your insurance provider about the addition of an ADU to ensure it is covered under your current policy. This may lead to an increase in premiums due to the added value and potential risks associated with the new structure. Ensure your policy includes adequate liability coverage, especially if you plan to rent out the ADU. You might need a landlord insurance policy. This type of coverage typically includes protection against tenant-caused damages, loss of rental income, and additional liability protection.
Property Taxes: Adding an ADU can increase your property’s assessed value, which may result in higher property taxes. The increase will depend on local assessment rules and the added value of the ADU.
How long does it take to build an Accessory Dwelling Unit?
There are three primary stages in the ADU process: plan development, city approvals/permitting, and construction.
The overall timing depends on whether you are doing a garage conversion or building a new ADU. For a garage conversion, expect the entire process to take about 5-6 months, which includes the time to design the plans, time for the city to do the plan check, and the construction process – which usually takes about 2-3 months.
A new ADU will take longer in construction, so you can expect the entire process to last 6-9 months, with the construction phase taking 3-6 months.
What is the process of building an ADU?
This process starts with a homeowner meeting with one or more general contractors, who will come to your home to discuss the project and give some guidance about the constraints, size, design, estimated costs, etc. The contractor can give you a very rough budget for costs at this point.
Once the owner and contractor decide on the basic plan, they will bring in an architect or plan designer to start the architectural plans. Once the plans are done and approved by the owner, the contractors will prepare accurate, detailed estimates.
Next, the owner will choose their favorite contractor and sign a contract for the work. The architect will submit the plans to the building department for plan check and coordinate this process until a building permit is ready. Finally, construction can start.
Pro-Tip: If you live in a community with a Homeowner’s Association (HOA), inquire with them early in the process about any restrictions and design standards you will need to meet to get their approval of your project. They cannot preclude you from building an ADU, but they can put additional requirements on your design, etc.
New ADU Laws for 2024
AB 1033
The excitement surrounding the enactment of AB 1033 in October 2023 is well-founded. This law introduces a groundbreaking change by allowing Accessory Dwelling Units (ADUs) to be sold separately from the main home on a property, a practice previously prohibited. However, while the potential impact of this law is significant, there are certain complexities and limitations that merit discussion.
To begin with, AB 1033 specifies that a municipality or city may enact an ordinance permitting the individual sale of ADUs but does not mandate it. Consequently, some cities may choose to adopt such an ordinance, while others may opt not to embrace this law within their jurisdictions.
The process of selling an ADU separately from the main home is far from straightforward. It necessitates the transformation of the property into a “condominium,” involving the legal division of ownership between the units, specifically the main home and the ADU. This process mirrors what condominium developers employ to segregate ownership and facilitate the sale of individual units in a condominium project.
The process is intricate and demands a considerable degree of expertise, financial investment, and time. It commences with the engagement of an attorney to draft various condominium documents, including ByLaws, CC&Rs, and Declarations, among others, and hiring a surveyor to create a condo plat map delineating ownership boundaries. These documents must be submitted to the California Department of Real Estate for approval and subsequently recorded at the County Recorder’s office.
With the completion of these steps, you can proceed to sell the ADU as a “condo” on your property. However, it is essential to bear in mind that you have established a Homeowners Association (HOA) between your two properties, which must collaborate to manage common areas. This transition also results in a reduction in the value of your main home as it is transformed from a single-family residence into a condominium.
If you have a mortgage on your property, you will need to handle the process of obtaining approval from your lender to sell off a portion of their loan security, namely the ADU and part of the property. This is unlikely to be a smooth experience.
AB 976
Before the enactment of AB 976, the prior statutes prohibited California cities and municipalities from imposing “owner occupancy” restrictions on all ADUs permitted between January 1, 2020, and January 1, 2025. This granted property owners the flexibility to rent out their ADUs to tenants. However, following the expiration of this timeline in 2025, cities theoretically had the authority to reintroduce owner-occupancy restrictions on ADUs, potentially reducing the availability of rental housing.
AB 976 eliminates the deadline limitation, permanently barring cities from implementing owner-occupancy restrictions on ADUs moving forward. Nevertheless, it preserves the ability of local governments to limit rental periods to durations shorter than 30 days.
AB 434
AB 434 mandates that all California cities and municipalities establish a pre-approved ADU plan program by January 1, 2025. This requirement encompasses the acceptance of plans for submittal to be “pre-approved” for future use by other owners or applicants. It necessitates the posting of these pre-approved plans on the city’s website. Cities can choose to feature and “pre-approve” plans that were previously sanctioned in other cities or regions of the state.
Although the text of the law does not explicitly specify this, it is presumed that architects will be the primary individuals obtaining “pre-approval” for their designed plans, which will subsequently be published on the city’s website. As architects retain ownership rights over their design plans, those seeking to use these pre-approved plans will likely be required to pay a fee to the architect.
Even pre-approved ADU plans are not entirely full, as each property presents unique considerations, necessitating potential alterations or appendices to adapt the plans to each situation. The new law also permits cities to impose the same fees for the “plan check” process, whether for pre-approved plans or any other set of plans.
The law’s objective is to enhance the efficiency of planning and constructing new unit ADUs in California. While not all property owners will be able to use pre-approved plans due to the unique characteristics of their properties, many homeowners starting ADU construction projects may find that the city’s pre-approved ADU plan website can help reduce both the time and costs associated with developing custom plans.
Finding The Right Team – How do I hire a good Orange County ADU Contractor?
You’ll need to find an architect or designer to create your ADU plans and blueprints. In some cases, your contractor has a relationship with an architect who is capable of creating the plans. In other cases, you’ll need to find your own architect to work with (call GreatBuildz for recommendations). Most importantly, you’ll want to look for an architect who is experienced working in your city. Every municipality is different, and you want someone who knows your city’s specific ADU rules and guidelines. A full set of ADU plans should cost you between $7,000 – $15,000, including submittal to the city and approvals.
When you’re looking to build an ADU, it’s important to look for only local, licensed General Contractors. No others are qualified to do this type of major construction, and using an unlicensed contractor or handyman could be a big mistake. Only reputable general contractors have the right licensing and insurance to build such a major project.
There are some other criteria you should use in selecting a contractor, not including their price…
Things to look for in an ADU contractor:
- Valid & current contractor’s license:
It’s extremely important to check a contractor’s license on the Contractors State License Board website to confirm it is active, there are no disciplinary actions, and they have Workers’ Compensation insurance (assuming the GC has employees).
- Insurance:
Always get a copy of a contractor’s insurance certificate and make sure it’s not expired. It might be a good idea to call their insurance broker and ask if they’ve had any insurance claims against them. There have been cases where uninsured contractors have ‘photoshopped’ their insurance documents to trick homeowners, so you can never be too careful.
- Check their references:
Ask every contractor for at least three references that you can call. It’s important to call these folks and ask about their experience and satisfaction with the contractor’s quality, schedule, and communication skills. If you can get some pictures of the work, that’s helpful too. Or you can visit a project the contractor recently completed to gauge the quality of the work.
- Read online reviews:
It’s a good idea to do a Google, Yelp, and Social Media search of the contractor to check for any negatives or red flags. Read all reviews you can find about their business, keep an eye out for fishy or fake-sounding reviews, and make sure to address any issues you find with the contractor. I’ve written a detailed article specifically on the topic of hiring an ADU contractor. If you’re currently in the process, take a look at it here: https://www.greatbuildz.com/blog/find-an-adu-contractor-10-tips/
ADU Orange County Advice & Tips:
1. Don’t act as your own general contractor unless you actually are one. Sometimes, people forget that an ADU is just a small house. And most people wouldn’t consider building a house themselves. It should be no surprise that a general contractor will charge a 10-20% profit margin to complete an ADU project, and some folks feel like they could save this substantial amount of money by hiring all the various workers on their own. But, this is a terrible idea because you would need to first find and interview a ton of licensed subcontractors: framers, concrete, drywall, roofing, flooring, plumbing, tile, electrical, painting, stucco, and on and on. And, if just one does a poor job or doesn’t show up, your project is stuck and delayed indefinitely. Bottom line… it’s a huge undertaking and not worth the headaches.
2. If you want to save costs on your ADU, you should do this very early in the process while you’re developing your design plan & scope. The layout and design of your ADU will be integral to your total budget, so ask your architect and contractor to value engineer your plan before you finalize it. In addition, you need to know that materials matter a lot, so you should be shopping early to provide the materials you want to your contractor. Things that can save you money are pre-fab cabinets, limiting the amount of tile in the unit, using laminate flooring, choosing reasonably priced doors & windows, and buying lower-priced appliances.
3. Plan your budget to include a 10-20% contingency on top of your total contract price. Invariably, things will go wrong and surprises will arise, so if you have a budget for this, it will take away some of the sting. Keep in mind that if you select the lowest contractor bid, you are more likely to get hit with extra charges or change orders along the way. This should not be surprising. The lowest-priced contractor has accepted the project for the smallest profit margin and, therefore, has little room for error. If issues arise along the way, they will not be able to endure the extra cost and will likely require you to pay for it.
4. Make sure to speak with your insurance agent when you get ready to start on your ADU project. They may advise you on the coverage you need while you’re in construction. They will also inform you about upgrading your homeowner’s insurance permanently when your ADU is completed. You may also need a different policy for the ADU if you decide to rent it to tenants.
At GreatBuildz, we take contractor screening seriously. We take all the steps above, in addition to running a background/financial check and requiring contractors to sign our 20-point Code of Conduct.
Frequently Asked Questions
How much does a granny flat cost in Orange County?
A granny flat, or ADU, in Orange County typically costs $120,000 to $150,000 for a garage conversion and $180,000 to $400,000 for a detached new build, at roughly $350 to $400 per square foot. Size, finishes, and site conditions determine the final price.
How big can a granny flat be in California?
California allows detached ADUs up to 1,200 square feet, and cities cannot set a lower maximum. Units of 750 square feet or less are exempt from city impact fees, which helps keep the cost down for smaller granny flats.
Do I need a permit for a granny flat in Orange County?
Yes. A granny flat needs approved plans and a building permit, and the city must approve or deny a complete application within 60 days under state law. A garage conversion also does not require you to replace the lost parking.
When you’re ready to get real contractor estimates for your Orange County ADU or garage conversion project, make sure you start by reviewing and completing this ADU scope checklist. Having a checklist of the items you want included in your project is a great first step to ensure every contractor you meet has a complete understanding of your project needs and expectations.
Once you receive multiple ADU contractor bids, make sure to review them carefully to ensure they are all apples-to-apples. There is no point choosing the lowest bid if its missing items that you need included. Also, keep in mind, each bid might have different inclusions for the cost of finish materials, so that could skew each bid higher or lower.
Feel free to call our free service and our friendly staff will match you with several fully vetted, honest contractors in Orange County, Ventura, LA, or San Diego who are experienced with ADUs. For more info, visit www.greatbuildz.com or call 818.317.3567 today.
