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Project Cost
It is important to make the distinction between total project cost and construction cost for every ADU or custom home project. Total project cost includes the cost to build the project and also the soft costs which include design fees, consultant fees, and the cost of permitting. Typically you can expect that the total project budget would break down into the following: 80% direct construction costs, 10% design fees, 10% consultant and permitting fees.
Design
Drawing a custom custom design is the fun part. Navigating the near impossible bureaucracies of California cities is the time-consuming, hard and frustrating part. We happily do it all for you!
You can expect the hours required for all aspects of the design and permitting of your project will add up to several hundred hours of work which is typically 7-10% of the construction costs.
Consultants
Our team will engage several consultants in order to complete the project work. Almost all projects require a structural engineer, surveyor, and Title 24 energy efficiency analyst. Many projects also require a civil engineer for grading and drainage, arborist, geo-tech/soils engineer, and special engineering inspections. The specific consultants needed varies from project to project and city to city. We will estimate these costs in our initial quote to minimize surprises. Other firms ignore these consultants as your responsibility to determine - we don’t, we manage them because it is what we do - and you don’t need to get up to speed on 5-10 engineering fields for a once in a lifetime project!
These fees would fall in the soft costs category mentioned above.
Permitting
Real estate development of any kind is primarily a political challenge. The challenges are caused by regulations - many of which keep us safe and protect our communities. Each jurisdiction (city, county, and state), has their own rules and regulations that guide the design and construction process and permitting requirements. They also all assess their own fees to give permission to build. Depending on where your project is located you will have a combination of planning fees, permit review fees just to get your application reviewed, and then actual permit fees for your building permit. Other development fees assessed by the various departments that oversee infrastructure and development in your town. These may include fees for departments such as water and sewer, parks, schools, streets, and potentially others. We research these during the design process and keep you informed.
Construction
We provide a fixed price construction agreement and fixed price bid from a local licensed General Contractor and we administer the entire budget and payment process. We also have an in-house data science and estimating team to guide your design process so your final bid is not a surprise. At New Avenue your bids are in line with your budget because we integrate the design, estimating and building team from start to finish! This is when all of the hard work of design, documentation, and permitting pays off, and you start to see your project physically take shape. This is also where the bulk of your project budget will go. The cost of construction is what we call “hard costs” and typically makes up about 80-85%% of the total project budget. This includes all of the materials, labor, and sub-contractors needed to construct your project in one easy-to-follow budget broken down by line item. We then bill monthly as "a percentage complete” for each line item. You know that you are getting what you pay for!
Other Considerations as You Develop Your Budget
Sustainability
We design homes that address sustainability in three ways: environmental, social, and economic. Our buildings are calibrated for high performance, reducing the energy, water, and resources needed to make them function. Your project will be designed with strong connections to the surrounding landscape in order to have a positive impact on the environment. Interiors are laid out to maximize comfort, views, and natural light. Our practices add accessible, affordable housing, making more homes available to those who need them. Our designers make each homeowner's needs a priority and are skilled in techniques such as universal design. Economic sustainability comes from the return on investment adding units provides. We help you build wealth, diversify income streams, and bring economic sustainability to your life.
Lifecycle Costs
As you are working through your finances for your project, make sure you consider the long term expenses in tandem with the upfront costs. Often investing in higher quality materials or systems can actually save money over the length of time you own the building. For instance, paying more up-front for a standing seam metal roof could save you thousands of dollars when you consider the cost of multiple replacements of asphalt shingles over the years. Making decisions to invest in durable, long-lasting, and timeless design may be worth increasing your budget for now in order to save costs down the road. As you work with the designer to select the finishes, fixtures, and equipment talk with them about where it might be prudent to spend more to save later. This is a place where designers can provide immense value.
Historic Data
At New Avenue we have a database of statistics we have collected on hundreds of projects we have worked on over the years. This gives us unique insight into housing trends and construction cost changes. We rely on this information to better inform our clients and guide our design/build team to provide better services. We also believe in transparency. We have published project cost information on dozens of projects on this website. However, we also have hundreds of more that we can draw from if what you find here isn’t relevant to your project. please reach out to us on our contact page or by scheduling a call if you would like to know historic cost information on a particular project type, a unique site condition, or a specific layout or size. We will do our best to find some relevant data to share.
Fluctuation
Costs change constantly and often without warning. Political decisions like tariffs can cause prices on some items to double overnight, while labor supply and material shortages can fluctuate on a month-to-month basis. It is important to consider this while doing your research. We share a lot of costs of past projects and try to update the numbers based on current pricing so the are relatively accurate. Pricing could change 10-20% between an early project estimate delivered after the consultation meeting and the final hard bid delivered when the design work is complete.
Value Engineering
This is the process of making revisions to prior design decisions in order to bring the budget down. We aim to avoid this process but from time to time it is not unusual to have to go through a price reduction exercise. In these cases, we sit down with the clients to review the current design and identify places we could make changes to reduce the construction costs. This could include making the project smaller, selecting cheaper materials, or eliminating features that aren’t necessary. These can be tough decisions and we will do our best to guide you along. This is an additional service that isn’t included in base design fees.
Sourcing Materials
Our team looks to find quality materials that matches the design specifications and are sustainably sourced. To maintain the project schedule, project budget, and the quality our client’s expect, we require that your builder directly orders and purchases all materials for each project. Contractors often get preferential pricing on finishes, fixtures, and equipment, which can save you money and our team has the relationships and expertise to get things to the job site safely and on time.
Typical Project Costs
Detached ADU
The easiest path to adding a new unit is by building a Detached ADU. These projects have a minimal impact on the existing house, allowing you or tenants to remain living on the property for the duration of the project. Further, these are the easiest to build as the contractors don’t have to work within the often tight confines of an existing structure. They also allow us to design a project that takes advantage of new materials and technology, often creating a more efficient and high-performance building. These are the most popular form of ADUs.
Average Cost: $387,000
Cost Range: $250,000 to $950,000
Conversion ADU
On properties that have existing garages or large basements converting space into ADUs can be an option worth considering. There are some complications that can arise - like structures that weren’t built to code or existing plumbing or electrical systems that need to be upgraded - but this approach may still yield great results. There are many reasons to convert existing space, but be warned, this doesn’t necessarily save costs. Working within existing structures is more difficult, and often repairing or upgrading structures to make them livable can be as much or more expensive as building new.
Average Cost: $329,000
Cost Range: $300,000 to $1,200,000
Custom Home
Although ADUs are the bread and butter projects for New Avenue, we are passionate about working with clients to design and build homes that are aligned with their values and lifestyle. This is why we love when clients approach us for custom homes. These projects tend to be quite a bit more expensive than ADUs, primarily because of their size and that clients tend to want to invest in higher quality materials, finishes, and systems for the homes they will be living in themselves. For a custom home the budget should really start at around $1 million and go up from there depending on your needs, taste, size, complexity of the site, and other considerations.
Average Cost: $1,195,000
Cost Range: $800,000 to $3,000,000
Plex Development
As a company dedicated to creating new housing, working on small multi-family projects perfectly aligns with our values. We love converting large homes into duplexes or triplexes, or working with clients to create multi-plex developments that provide much-needed housing. We have completed 7-unit rowhouses, triplexes, and cottage clusters to name a few. Each of these are challenges that require create solutions to make units that are beautiful, durable, and affordable to build. We love taking on these challenges and working with clients to create creative and inspiring “missing middle” style housing.
Average Cost: $1,845,000
Cost Range: $1,500,000 to multi-million