Complete 2026 cost breakdown: construction, permits, financing, and expected rental ROI.
Calculate your Ann Arbor ADU cost →Building an ADU in Ann Arbor costs between $120,000-$240,000 for new construction, with per-square-foot costs averaging $180-$300. These figures include design, permitting, site preparation, and construction. The most affordable option is a garage conversion at $60,000-$130,000, while prefab/modular ADUs fall in between at $90,000-$180,000.
| Cost Category | Estimated Range |
|---|---|
| Architectural Plans | $3,000 – $15,000 |
| Permits & Fees | Building and trade permit fees are based on construction valuation — confirm current fee schedule with the Ann Arbor Building Department |
| Impact Fees | None — Michigan law does not authorize municipal development impact fees; budget for water/sewer and utility connection charges instead |
| Site Prep & Foundation | $10,000 – $35,000 |
| Framing & Structure | $15,000 – $45,000 |
| Plumbing | $8,000 – $20,000 |
| Electrical | $5,000 – $15,000 |
| HVAC | $3,000 – $8,000 |
| Interior Finishes | $15,000 – $40,000 |
Quotes for the same ADU commonly vary 20–40% between builders. Get up to 3 free quotes from ADU builders serving Ann Arbor — no obligation.
Get Ann Arbor builder quotes →Permit fees in Ann Arbor are Building and trade permit fees are based on construction valuation — confirm current fee schedule with the Ann Arbor Building Department. The review timeline is No hearings required, so review runs on standard building-permit timelines — confirm current plan-review turnaround with Ann Arbor Planning Services (734-794-6265), with plan check: Zoning compliance is reviewed as part of the building-permit process; a property survey may be required to verify setbacks. Impact fees are None — Michigan law does not authorize municipal development impact fees; budget for water/sewer and utility connection charges instead. Pre-approved plans: No city pre-approved ADU plan library — confirm with Ann Arbor Planning Services.
| 1-Bedroom Rent | $1,450-$1,650/month |
| 2-Bedroom Rent | $1,900-$2,000/month |
| Annual Rental Income (est.) | $18,600/year |
| Payback Period (est.) | 9.7 years |
| Short-Term Rental | No — leasing or renting an ADU for less than 30 days is prohibited |
| Overall ROI Estimate | 6-10% annual return |
A typical ADU in Ann Arbor generates approximately $18,600 per year in rental income based on average 1-bedroom rents. At an average construction cost of $180,000, the estimated payback period is 9.7 years — before accounting for the resale value the ADU adds, which an appraiser determines from comparable sales in Ann Arbor and varies by market (often less than build cost).
1. Garage conversions save 40-60% vs new construction since the shell already exists. Average cost in Ann Arbor: $60,000-$130,000.
2. Prefab/modular ADUs offer predictable pricing and faster timelines. Average: $90,000-$180,000.
3. Pre-approved plans — Ann Arbor does not offer a pre-approved/standard ADU plan program yet, so budget for custom architectural plans (typically $3,000-$15,000).
4. State grants — California's CalHFA ADU grant (up to $40K) is currently paused; check calhfa.ca.gov/adu for status and your state for active programs.
5. Get multiple bids — ADU contractor pricing varies 20-40% for the same project. We recommend getting at least 3 quotes.
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