Complete 2026 cost breakdown: construction, permits, financing, and expected rental ROI.
Building an ADU in San Jose costs between $180,000-$400,000 for new construction, with per-square-foot costs averaging $250-$450. These figures include design, permitting, site preparation, and construction. The most affordable option is a garage conversion at $100,000-$220,000, while prefab/modular ADUs fall in between at $130,000-$300,000.
| Cost Category | Estimated Range |
|---|---|
| Architectural Plans | $3,000 – $15,000 |
| Permits & Fees | $4,000-$14,000 |
| Impact Fees | Waived for units under 750 sq ft |
| 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 |
Permit fees in San Jose are $4,000-$14,000. The review timeline is 60 days, with plan check taking approximately Standard review process. Impact fees are Waived for units under 750 sq ft. Pre-approved plans: Limited pre-approved options available.
| 1-Bedroom Rent | $2,000-$2,800/mo/month |
| 2-Bedroom Rent | $2,500-$3,500/mo/month |
| Annual Rental Income (est.) | $28,800/year |
| Payback Period (est.) | 10.1 years |
| Short-Term Rental | Restricted; requires transient occupancy tax registration |
| Overall ROI Estimate | 5-9% annual return |
A typical ADU in San Jose generates approximately $28,800 per year in rental income based on average 1-bedroom rents. At an average construction cost of $290,000, the estimated payback period is 10.1 years — before accounting for property value appreciation, which typically adds 20-35% to home value.
1. Garage conversions save 40-60% vs new construction since the shell already exists. Average cost in San Jose: $100,000-$220,000.
2. Prefab/modular ADUs offer predictable pricing and faster timelines. Average: $130,000-$300,000.
3. Pre-approved plans (Limited pre-approved options available) can save $3,000-$10,000 in design costs and 2-3 months in review time.
4. State grants — California's CalHFA program offers up to $40K. Check your state for available 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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