cost to build a guest house

How Much Does It Cost to Build a Guest House in 2022?

How Backyard Guest Homes Offer Creative Housing Solutions for the Aging Population

As the population ages, so does the need for creative housing. Most of the aging population are not ready to move into a retirement village or nursing home. Yet few can afford to continue to care for a large home on their own. 

Backyard guest homes have long served multiple purposes. They work well to solve this problem by giving older individuals a home to live in while staying close to their family living in the primary residence. When the homeowner no longer needs the guest home for their family, they now have an opportunity for an investment.

But what about the initial cost of building another home? The cost to build a guest house may surprise you. After all, you’re not building a brand new, full-size home. 

Keep reading to learn about the primary and associated costs of building a guest house. 

General Cost to Build a Guest House

The general cost to build a guest house varies tremendously. These are real homes after all, and have all requirements of any single-family home build project. . Depending on the location (or jurisdiction), property requirements, property challenges, quality, not to mention the size, and finishes, guest houses range from $250,000 to $1,000,000 or more in California’s Bay Area. That said, no two guest houses are the same and understanding your own budget and costs are entirely unique to your property. Don’t expect a quick ballpark estimate from a professional that hasn’t completed meaningful research on your property. 

It’s also worth noting that material prices have surged significantly in 2022. Because of the growth increase in demand, prices have spiked between 5 and 10 percent in 2022. Additionally, many parts of the country have longer delivery times due to the pandemic

Check Neighborhood Regulations First

Before you contact a contractor or begin plotting the place for your guest house, check your neighborhood regulations. A guest house, also known as an accessory dwelling unit or ADU, may be smaller than your regular home, but it’s still an addition to the property. Some are detached stand-alone buildings while others may be attached to the main home. 

Just check your covenant and zoning regulations before you attach yourself to the idea of a guest house. 

Steps for Building a Guest House

Once you’ve established that you can afford to build a guest house, you’ll follow these basic steps. 

  • Begin with project validation: A builder will research and inspect your property to determine the validity of having a guest home on your property. This should be a detailed process that looks into a number of specifics including your property’s characteristics, city information, and at last a site inspection. In short, they’ll make sure you can have the guest house you’re dreaming of for the budget you have.  Once the builder has validated your project, they will personalize your guest house. 

  • Then they will share a series of floor plans with different elevations that work for your backyard. They’ll give you different interior design options, and they will offer upgrades. 

  • Finally, the builder will construct your home. But before they put hammer to nail, they’ll give you the detailed cost of the project as well as a schedule for building the guest house. They’ll also take care of any permits you need to build a guest house in your backyard. And permits are no small feat. Often, permitting is the most complex part of the ADU process, requiring the most experience. 

A great build team will take the headache out of construction for you. Thus you can just sit back and enjoy your new building. Expect a mess. The construction process is not pretty, but once it’s complete you’ll have a second, fully functioning, and beautiful home on your property.

Factors that Affect the Cost of Building

As you think about the type of guest house you want, consider the factors that affect your cost. Typically, property owners go into the project with a general overall cost in mind. These are the factors that can either raise or lower that cost. 


The size of your guesthouse affects cost. Larger homes require larger spaces and thus more time to demolish and clear the area.

Contractors aim for minimum square footage when they begin building. Building permits will require this minimum size. Thus contractors will attempt to go over the minimum size to increase their chances of approval to build. 

The type of home will play a part as well. Custom homes are nice, but they will cost more than a modular or prefabricated home. Modular homes have a shorter life expectancy well, lasting around 35 years on average, and are generally not valued the same as a traditionally built home. This has to do with lenders/assessors assessing the structure’s quality long term. 

Permit costs

Permits and fees are dependent upon your jurisdiction and property’s location. Additionally. Should it apply, your homeowner’s association may also require special permits, adding to the building permit. Extras like a privacy screen or fence can also require a special permit.

Plumbing and Electric

Installing plumbing and electricity in a guesthouse will cost as much as installing plumbing or electricity in a new structure. You will need just as many fixtures in the guest house as you would for a bathroom in the main house. Much of the costs start to add up when there is substantial trenching or distance from the utilities. The farther an ADU is from your home or street, the more the costs rise.

Welcome Guests Today

The cost to build a guest house depends on lots of factors:  location, size, as well as the cost of permits, utilities, and materials. With that said, a guest home gives aged loved ones a place to live. It also offers homeowners a passive income and a smart way to use their property. 

Would you like to build a guest house? If so, contact us. We can help you find the ADU that is right for your property and lifestyle. 

Give us a call today. 

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