Planning to build an accessory dwelling unit (ADU) in Austin? Creating a budget is one of the most important parts of the process. Having a detailed and accurate budget allows you to estimate costs, secure financing, and plan the project wisely. While each ADU project is unique, there are some general guidelines to follow when budgeting that can help you get started.
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Calculate Construction Costs
The largest chunk of your budget will go towards physical construction of the ADU. This includes materials, labor, and contracting fees for the general contractor or construction company. For a basic 600 sq ft detached ADU with one bedroom and one bathroom, total construction costs often range from $80,000 to $150,000 in Austin. Prices per square foot generally fall between $125 to $200. Higher end fixtures, finishes and features can increase costs.
Factor in grading, excavation, utility connections, and any site work needed to prepare the build site. Permits and fees for the city permitting office can cost $2000 to $5000. Be sure to build in a 10-15% contingency fund for any unexpected overages or changes that come up during construction.
Design and Architectural Fees
- Hiring an architect to create designs and plans is highly recommended for ADUs.
- Typical architectural fees range from 8-12% of total construction costs.
- For a $100,000 build, you may pay $8000 – $12,000 in design services.
- Complex projects usually warrant higher fees.
Shop around for architects as rates can vary widely. Look for those experienced in ADU and secondary suite construction. Check references and examples of past work when selecting an architecture firm. Value tends to outweigh lower cost when hiring quality designers.
Loan Financing Charges
Most homeowners take out a construction loan or home equity line of credit to fund an ADU build. Estimate 1-3% of the total loan amount for loan origination fees. Appraisal and credit check fees generally add another $1000 or so. Interest charges will accumulate on the loan during the building phase before it converts to permanent financing. You may be able to roll closing costs into the total loan.
Alternatively, some homeowners opt to pay for construction costs out of pocket, especially if they have cash reserves. This avoids loan fees and interest payments. But make sure you have adequate funds before starting without financing.
Contingencies and Unexpected Costs
- It’s always smart to build in an extra 10-20% contingency fund for your ADU budget.
- Excavation challenges, revised finishes, changes to plans, or surprising permit fees can arise.
- Giving yourself a buffer for unknowns or overages ensures you don’t end up over budget.
If possible, get quotes for materials and labor a few months before starting construction. Prices can fluctuate given supply chain issues or demand changes. Renewing quotes just prior to starting can lock in the best rates.
Be Realistic With Your Budget
Creating a realistic budget prevents “sticker shock” when you get final quotes from builders and contractors. As you ballpark costs, compare your estimates to recent ADU projects of similar size and features in Austin. Don’t rely on national averages only.
Building an ADU is a major investment that adds tangible value. But projects almost always end up costing more than initial budgets estimate. Having accurate estimates ensures you can comfortably afford the out-of-pocket costs and loan payments. Your budget accounts for all essentials without cutting needed corners.
With good planning and discipline, building an ADU provides excellent returns. The added living space allows you to generate rental income, host guests, or create a personal retreat. By following these budgeting basics, you can make your ADU project a success.