Interior Junior ADU, Garage Conversion, or Detached ADU: What Each One Really Costs

Most owners compare accessory dwelling unit (ADU) types by price. Price is real, but it's the smallest difference between them. The type you choose also decides whether you have to live on the property, how much of your home sale is tax-free, what the utility company can require, how much digging happens in your yard, and how much cash the property throws off. Decide all of that before you build, not after.

What does each type of ADU cost?

Roughly, from cheapest to most expensive:

Interior junior accessory dwelling unit (JADU): about $80,000 to $160,000. It's carved out of space inside your house, up to 500 square feet, with no new foundation, walls, or roof.
Garage conversion: about $100,000 to $175,000. The slab, walls, and roof already exist; you're paying to make them livable.
Detached ADU: about $250,000 to $400,000 and up for 600 to 1,200 square feet. Everything is new, starting with the dirt.

These are published 2026 ranges from Southern California builders, most of them working in Los Angeles and Orange County. Ventura County bids will land in the same neighborhood, but get your own before you budget off anyone's chart, including mine.

What do the cheaper options give up?

A junior ADU is limited to 500 square feet inside the main house and needs only an efficiency kitchen. The bathroom is the decision that matters. If the junior ADU shares a bathroom with the main house, you must live on the property. Since January 1, 2026, if it has its own bathroom, you don't. The extra plumbing often pays for itself in flexibility.

A garage conversion costs you the garage, but the city can't require replacement parking when the garage becomes an ADU. Older garages can hide surprises: a thin slab, no footings worth the name, framing that won't pass inspection. Have the structure looked at before you assume it's the cheap option.

Which type produces the best cash flow?

The conversions, by about two to one. Tenants pay for bedrooms and a private entrance; a new building earns little premium over a well-done conversion with the same layout. Here's gross annual rent divided by build cost, using mid-range build costs and current rents:

Detached one-bedroom: about $280,000 to build. A detached one-bedroom we manage in Simi Valley rents for $2,195 a month, roughly a 9% gross return.
Detached two-bedroom, about 1,000 square feet: about $350,000 to build. Current listings run $2,400 to $2,800, roughly 9%.
Garage conversion, as a one-bedroom: about $140,000 to build. With the same layout, it rents for about the same $2,200, roughly 19%.
Interior junior ADU, as a studio: about $120,000 to build. A comparable studio we manage rents for $1,675. If you rent the main house, it loses a bedroom, and in our experience a bedroom is worth about $300 a month. That nets roughly 14%. If you live in the main house, the spare bedroom costs you space, not rent, and the return is closer to 17%.

A worked example: one Camarillo house

Averages only go so far. Take a two-story, four-bedroom, three-bath house in Camarillo with a bedroom and full bath downstairs and a two-car garage. As is, it rents for about $4,500 a month.

Add a junior ADU. Put an efficiency kitchen in the downstairs bedroom and bath, and maybe move an interior wall to gain space. The junior ADU rents for about $1,800. Because the downstairs bath goes with the unit, it has its own bathroom, so there's no owner-occupancy requirement.
Convert the garage. As a one-bedroom ADU, it rents for about $2,200.
The house in front becomes a three-bedroom, two-bath with no garage and less privacy. It drops to about $3,800.
Together: $3,800 plus $1,800 plus $2,200 is $7,800 a month, against $4,500 before. That's $3,300 a month more, or $39,600 a year.

The returns:

Junior ADU: it reuses an existing bathroom, so it should cost less than the typical range. At $80,000 to $120,000, its net gain of $1,100 a month ($1,800 in rent, minus the $700 the house loses) is roughly an 11% to 16% gross return.
Garage conversion: at $140,000 to $175,000, its $26,400 a year is roughly 15% to 19%.
Both together: about $220,000 to $295,000 total, roughly 13% to 18%.

Compare that to a detached one-bedroom at about 9%. A house like this already holds most of its own upside. If you're shopping for a property to do this with, "Can an ADU Work for You?" Part 2 lays out what to look for.

Every figure above is gross. Subtract property tax on the new construction (roughly 1% or more of its value a year), insurance, maintenance, vacancy, and any utilities you carry. The trade-offs come with the rent, too: three households on one lot, shared utilities you'll have to allocate and disclose (Part 5), and a property that's likely under the statewide rent cap.

Will the ADU put your property under rent control?

Plan on yes, and decide with that in mind. As Part 1 explained, a single-family home is usually exempt from the rent cap and just-cause eviction rules of Assembly Bill (AB) 1482, the Tenant Protection Act. Adding an ADU likely ends that exemption, starting the day the ADU receives its certificate of occupancy. If you live on the property and rent no more than two units, you keep a just-cause exemption, but never a rent cap exemption. Oxnard and Ojai add their own local rent rules on top.

All three types trigger this. The one difference: a brand-new detached ADU may be exempt on its own for 15 years from its certificate of occupancy, while the house in front generally isn't. How the rules apply to two certificates on one lot isn't settled, so don't build a plan on it.

The practical rule: underwrite every option at the rent you can charge on day one, with capped increases after that. If the numbers only work with market-rate increases, they don't work.

Which type affects your taxes when you sell?

When you sell your home, federal law lets you exclude up to $250,000 of profit from tax, or $500,000 for a married couple filing jointly. You qualify if you owned the home and lived in it as your main residence for at least two of the five years before the sale. That's Internal Revenue Code (IRC) section 121, and for most Ventura County owners it's the largest tax break they'll ever get.

The catch is that the exclusion covers the dwelling you live in, not the whole lot. Here's how each type lands:

Interior junior ADU, or an ADU in an attached garage: generally part of your dwelling. The exclusion still covers the house at sale. You'll owe tax, at up to 25%, on the depreciation you took (or were entitled to take) while it was rented.
Detached ADU, including a converted detached garage: a separate structure. If you rent it, the share of your profit that belongs to it may be fully taxable, even for years you lived in the main house. If the ADU accounts for a fifth of your gain, that fifth may fall outside the exclusion. The depreciation tax applies on top.

Moving out starts a second clock. Once you stop living there, you have about three years to sell before you fall outside the two-of-five-year window and lose the exclusion on everything. Part 2 covers this in detail.

The exception is the owner who never plans to sell. If the property passes to your heirs at death, they generally receive it at a stepped-up tax basis, and the sale exclusion question may never come up.

Can the cost of building the ADU be depreciated faster?

On your federal return, yes, and a cost segregation study is how. A rental building is normally depreciated over 27.5 years. A cost segregation study breaks the construction cost into parts. Appliances and certain finishes can qualify as 5-year property, and site work like fencing, paving, and landscaping as 15-year property. Under the July 2025 federal tax law, those shorter-life parts can be deducted 100% in the first year if they were acquired and placed in service after January 19, 2025. That's called bonus depreciation.

There are four catches:

California doesn't allow bonus depreciation. Your state return depreciates on the normal schedule, so you'll carry two depreciation schedules for the life of the property.
The deduction may not be usable right away. Rental losses are passive. The federal $25,000 allowance for owners who actively manage their rentals phases out between $100,000 and $150,000 of modified adjusted gross income. California doesn't recognize the real estate professional exception. Above those lines, a big first-year deduction can sit suspended until you have passive income or sell.
It comes back at sale. Depreciation taken on the shorter-life parts is generally taxed as ordinary income when you sell.
Small projects may not justify the study. On a $140,000 garage conversion, the study fee can eat much of the benefit. Get a quote and have your certified public accountant (CPA) compare.

Only the rented portion qualifies, and only while it's rented. That matters for a junior ADU inside the house you live in. "Can an ADU Work for You?" Parts 2 and 3 cover the depreciation math in more depth.

Which type can the utility company make you pay to connect?

For an ADU converted from existing space, the water or sewer provider generally can't require a new separate connection or charge a connection fee. For a new detached ADU, it can, as long as the fee is proportionate to the unit's size or plumbing load.

What does a prefab detached ADU really cost?

More than the quote. The quoted price is for the box, delivered. The foundation, utility trenching, and sewer line are site work, billed separately. Electric, gas, and water run under pressure and can go in shallow trenches. The sewer line runs by gravity, so it often has to run deep along the side of the house to the main sewer line out front, sometimes under a driveway. Get the site-work bid before you sign for the unit.

How to decide before you build

Match the type to your goal, then run your own numbers before you commit:

Best cash flow per dollar: garage conversion. If the house also has a downstairs bedroom with its own bath, add a junior ADU. Get the garage structure inspected first.
You'll keep living there and want options: an interior junior ADU with its own bathroom.
You may sell within a few years of moving out: don't rent a detached unit without first having your CPA run the IRC section 121 numbers.
Long hold, possibly to heirs, with maximum rent and privacy: detached, at roughly half the return per dollar.
Every option: underwrite with capped rent increases from day one.

I'm a property manager, not an attorney or CPA. Talk to both before you build.