Cost Guide

How Much Does an ADU Cost in Tempe, AZ?

Complete 2026 cost breakdown: construction, permits, financing, and expected rental ROI.

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New Construction
$150,000-$280,000
Garage Conversion
$80,000-$150,000
Prefab ADU
$150,000-$300,000
Cost Per Sq Ft
$175-$350

Construction Cost Breakdown

Building an ADU in Tempe costs between $150,000-$280,000 for new construction, with per-square-foot costs averaging $175-$350. These figures include design, permitting, site preparation, and construction. The most affordable option is a garage conversion at $80,000-$150,000, while prefab/modular ADUs fall in between at $150,000-$300,000.

Cost CategoryEstimated Range
Architectural Plans$3,000 – $15,000
Permits & FeesBuilding permit fee is valuation-based per City Code Fee Schedule Table 1-A, plus a plan review fee of 65% of the permit fee (Community Development Service Fees sheet); the Residential Rebate Program refunds 100% of both after final inspection.
Impact FeesTempe's fee page lists General Government Development Fees (impact fees) and water/sewer fees in the City Code fee appendix on Municode; no ADU-specific exemption is published, and impact, planning, fire and water/sewer fees are not covered by the Residential Rebate. Ask the Permit Center (480-350-4311) for the ADU amount; ARS 9-461.18(B)(3) bars parking in-lieu fees.
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

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Quotes for the same ADU commonly vary 20–40% between builders. We pass your request to up to 5 local builders serving Tempe, where we have them — free, no obligation.

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Permit Costs & Timeline

Permit fees in Tempe are Building permit fee is valuation-based per City Code Fee Schedule Table 1-A, plus a plan review fee of 65% of the permit fee (Community Development Service Fees sheet); the Residential Rebate Program refunds 100% of both after final inspection.. The review timeline is Target first residential plan review of 5-10 working days for projects under $500,000 and 4-6 working days per resubmittal (Building Safety Target Turn-Around Times, revised Aug 26, 2025); residential engineering review 5-15 working days., with plan check: Plan review fee is 65% of the building permit fee, paid at submittal; it covers the first review plus two resubmittals (a fourth review costs extra). Submit through E-Plan Review; first-review target 5-10 working days.. Impact fees are Tempe's fee page lists General Government Development Fees (impact fees) and water/sewer fees in the City Code fee appendix on Municode; no ADU-specific exemption is published, and impact, planning, fire and water/sewer fees are not covered by the Residential Rebate. Ask the Permit Center (480-350-4311) for the ADU amount; ARS 9-461.18(B)(3) bars parking in-lieu fees.. Pre-approved plans: Yes, partly: the ADU and Single-Family Standard Plan Library (opened for ARS 9-461.20 submittals on July 1, 2026) held one pre-reviewed detached ADU plan as of Sept 20, 2026, a 600 sq ft studio/1-bath from the 2025 AARP ADU Design Challenge; the other nine challenge winners are not yet licensed. Plans are licensed from the designer, then submitted for a building permit..

Rental Income & ROI

Investment Returns

1-Bedroom Rent$1,400-$1,750/month
2-Bedroom Rent$1,700-$2,100/month
Annual Rental Income (est.)$18,900/year
Payback Period (est.)11.4 years
Short-Term RentalYes, with a Tempe Short-Term Rental License (Ord.
Overall ROI Estimate6-11% gross rental yield

A typical ADU in Tempe generates approximately $18,900 per year in rental income based on average 1-bedroom rents. At an average construction cost of $215,000, the estimated payback period is 11.4 years — before accounting for the resale value the ADU adds, which an appraiser determines from comparable sales in Tempe and varies by market (often less than build cost).

Ways to Reduce ADU Costs in Tempe

1. Garage conversions save 40-60% vs new construction since the shell already exists. Average cost in Tempe: $80,000-$150,000.

2. Prefab/modular ADUs offer predictable pricing and faster timelines. Average: $150,000-$300,000.

3. Pre-approved plans — available in Tempe, which can save $3,000-$10,000 in design costs and 2-3 months in review time. See which cities offer pre-approved ADU plans.

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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About this information: This page is an informational summary of publicly available regulations - it is not legal, financial, or professional advice, and it is not a substitute for confirming requirements with your local planning department. Rules change frequently; always verify current requirements before designing, budgeting, or building. Last verified: 2026-09-20. Contractors we introduce are independent businesses - verify license and insurance directly before hiring. Spotted an error? Tell us - we verify against primary sources and correct quickly.

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