ADU Options Can Make Or Break Your Budget

January 26, 2021 John Arendsen


ADU Options are fast becoming a major growth industry. For California, they are paving the way for a unique level of housing affordability…………..Or are they?  You need to carefully consider your ADU Options.

The choice you make in the type of construction you choose can can greatly influence your decision as to whether or not you will move forward with your backyard  home project. 

We’re going to zero in on ADU’S  in the San Diego Market for three reasons.

  1. We are a licensed “B” General Contractor and “C-47”  Manufactured Home Contractor and can speak from experience on a variety of ADU options.
  2. Just like real estate, construction is local.
  3. We have lived in and serviced San Diego County for the past four decades and have a pulse beat on material, labor and overhead costs in this market.

Let’s start with Onsite Construction (aka ground up, site built, stick) built. This is generally the most expensive method for a variety of reasons.

  • Field labor is more expensive than factory labor
  • Material waste
  • Vandalism
  • Theft
  • Insurance
  • weather
  • Permitting & inspection timing and logistics
  • Delays and overlapping between the various trades.
  • Myriad project organization, coordination and expeiting issues.

Here’s how a site built project breaks down.

  1. It starts with site evaluations by the soils, civil, structural and in many cases septic engineers, architects, interior, hardscape and landscape designers.
  2. The General Contractor then goes out for bid.
  3. The General Contractor will then evaluate  bids and select his design and construction team largely based on price.
  4. One exception to this rule is if the client (property/homeowner) brings a pre-approved set of plans to the table. This makes the process one step easier, however, steps 1-3 still apply.

As most General Contractors work on a cost plus basis, they will then add their multiplier into the total cost of an already puffy price as all the subcontractors must add in their profit and overhead i.e. workman’s compensations, general liability insurance and administrative costs,  etc.

The bottom line for a legitimate general contractor in San Diego who is paying his workers compensation and general liability insurance, performance bonds (when required) and a fair wage to his subs and employees, is a cost between  *$300-$350 per square foot for most residential projects.

There is one exception to this rule. There are General Contractors who will take on the entire project themselves and perform all the trades with no subs and a minimal crew. They can be very good operators and can deliver a good product for under $300/sf. However, do expect for the project to take far more time to complete as each phase is done by the same contractor.

If you get prices much below that you might need to be wary. A low ball initial price might come in with many change orders, revisions or “I  didn’t know about that”.  Or they are not playing by all the rules and not paying for workers comp or liability insurance. If this is the case, should an accident happen, it will certainly fall back on you so be sure to check your homeowners insurance. Make sure your homeowner’s insurance is in tact.

Now let’s explore the world of a HUD Manufactured ADU options. 

  • A HUD Manufactured home is regulated by federal mandate and supercedes all local building jurisdictions thereby reducing the amount of red tape, bureaucracy, time and added cost spent during the permitting and site preparation process.
  • The HUD Manufactured ADU option only requires a site preparation/founda..on and final installation inspection which cuts multiple and lagging or delayed local jurisdiction inspections.
  • All the engineering is pre-approved by HUD thereby eliminating the need for costly specialty engineers.
  • They are built in a factory controlled environment using factory labor thereby reducing field labor costs, material waste, theft, vandalism and weather related issues.
  • Inspections take place in the factory.

The bottom line for a HUD Manufactured BACKYARD HOME option? *$200-225 per square foot.

*Prices subject to site development costs i.e. grading, excavation and utility installation.

For assistance with your ADU options, contact, John Arendsen at or call 760-815-6977.

If you want a step by step overview of the entire process we recommend that you download and read our ADU Guide. This is the exact protocol we use when working through the entire process. 

We always recom



Crest Homes is happy to introduce the release of the long-awaited Backyard Home Guide: Everything You Need To Know About Building An Accessory Dwelling Unit (ADU).

Now available on our website, this normally $19.95 publication is offered exclusively to all Crest Backyard Home subscribers and followers for only $14.95.

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