Basement ADUs can be one of the most affordable Accessory Dwelling Units (under the right circumstances…)

Basement ADUs are very exciting because they’re one of the most affordable ways to get an accessory dwelling unit on your property.

And ADUs are a powerful investment, you can start to generate passive rental income, or develop some housing security for yourself. 

In many homes, you’ll also be adding to the square footage of the property because you’re converting basement square footage that doesn’t count as living space into legal, living space.

I’m going to share useful information with you that you want to hear BEFORE starting that kind of project. 

And if you’re committed to finding out how to start a basement ADU conversion, I can tell you how to build one step by step once you’re ready.

Here’s what you’ll learn about Basement ADUs

At the end of this video, you’re going to have a great primer for basement ADUs and you’ll know 

• The biggest (most expensive) design concerns that can typically come up with Basement ADUs

• We’ll touch on some important design concepts for Basement ADUs 

• And have a few good ideas kicking around and you’ll be ready to start thinking about the next step.

At the end of the post, I’ll tell you where I learned all this information and how you can learn more. 

I’ll share a step by step guide to building your ADU.

Why basement conversions can be so affordable

Basement ADUs are very exciting because they’re one of the most affordable ways to get an ADU

They’re a type of conversion - that’s when you convert part of your primary home into a secondary unit

And they tend to be the most affordable type of conversion (in the right conditions).

You’ve already got floors, walls and ceiling. You can use the same water and electrical hookups (although they might not be exactly where you want them)

Now these strengths also create limitations which we’ll talk about later, but these can be a cost-effective way to get all the benefits of an ADU (passive income, housing flexibility, housing security, etc!) under the right circumstances.

How much money are we talking about?

I have heard of people doing basement ADU projects for $20k at the low end. 

That’s almost only going to happen if you have a basement that’s already finished like living quarters and you just need to tweak it to make it an ADU (ie adding a kitchenette, filing for a permit and that’s it). Here’s an example of a basement ADU that came in around $20,000 plus sweat equity.

There are lots of people out there with the right conditions to convert a basement for between $80k-$150k, which is cheaper than most detached ADUs, but the devil is in the details.

And I don’t want to sugar coat it, because I’ve also seen ADU projects that cost above $300k. At that point, you could have built a very nice detached ADU.

Basement ADU Budget Busters

These are the big budget busters that you should know about when you think about converting your basement into an ADU

• Foundation walls - up to $50k

• Water intrusion - $5k to $20k

• Headroom - up to $20k

• Entry/exit - up to $15k

• Utility access - $5k-$20k

  • Sewer line - up to $20k by itself

• Special window work - up to $5k

If you don’t need to do any of these more expensive pieces, you can probably budget a 750 sq ft basement ADU for 5 figures, all in with design, permits and construction under $100k - let’s talk more about permits though

Permitting your Basement ADU

• Permit fees vary by jurisdiction, and they vary more depending on the ADU project

• In a minute I’m going to give specific tips and examples for California homeowners where people cut a square foot off their plan and save over $5000

• If you’re building a $50k basement ADU, an extra $5k in entitlement fees is adding 10% to your costs!

So you want to know the rules and make the right choices!

How to think about entitlement costs

If you want the cheapest possible project, or you just hate paying planning fees (I get it) then there are two special ADU rules in CA that you can optimize toward

And these will limit your ADU’s size and function, and get you a cheaper project

But in most jurisdictions, you can go bigger than these suggestions with nominal costs

and I’d recommend you think about the more expensive options and build them into your budget so that you recover them through rent down the road

You might be able to build a nicer apartment and charge more in rent and make up for the expenses of entitlement and construction.

The key is to figure out what you’re getting for your investment!

Basement ADU Impact fees

Let’s talk about impact fees

These are a type of fee the city can charge during the permitting process.

These are fees that developers get charged as one offs during the permitting process, to offset costs to local services.

If you built a five story apartment building with dozens of people in it, you’d be putting a burden on schools, parks, and so on and the city charges an impact fee to help offset that usage.

And some cities were using impact fees to make ADU construction cost prohibitive. Very naughty.

But there’s a new law that passed in 2019 and went into effect in January 2020 in California. Now you can build an ADU under 750 sq ft and avoid impact fees completely

Example of how impact fees work

• In Cupertino, San Jose charges a 751 sq ft ADU $5699 in school and parkland impact fees

• The exact same homeowner applying for a 749 sq ft ADU will pay $0 in impact fees

Yes, this is real. That’s 5,699 dollars difference for two square feet.

So check what your city is charging for impact fees before you design your unit. 

If it’s not cost prohibitive, great. 

But if it’s $6000, and you’re only gaining a little bit of space, design around it.

How to Design Around permit fees

An ADU has to have some independent elements, but it’s allowed to share other elements with the primary residence.

For example, you could create a shared space for utilities access or a laundry room, spaces that don’t contribute to the ADU’s square footage. 

Consider making a shared space for utilities or creating non-living storage space that won’t contribute to the ADU’s square footage. You might be able to make a really nice shared laundry room that doesn’t count toward the ADU’s square footage.

Design Ideas for Basement ADU

The strengths of basement conversions are also the weaknesses.

You’re using the existing walls, ceilings, and structures. That makes it more affordable, but it also imposes limits on you

There’s an art here to using the weaknesses and turning them into useful design features.

I had a clip from Kol Peterson earlier. On his website, you can read about a lot of basement conversions. Some have a real Archeological feel to them because there’s always a surprise old junction box in the wall or a load bearing joist. 

Expect some surprises - be flexible - design around the basement because you won’t be able to bend the basement to your will.

For example, basements have nooks and crannies

• Basements often have a lot of nooks and crannies that you can use as storage space, without necessarily adding square footage to the ADU.

• You might have columns or other elements that can’t move. You want to fit what you’ve got into the space creatively

• You can make some pretty oddly shaped cabinets and closets and they will get used.

• There are lots of situations in a basement conversion where you can create extra storage space without eating into your precious livable square footage.

  • Consider common areas between the primary and secondary house.

  • Consider building an accessory structure for storage like a shed.

Think about Spaciousness

• Designing any ADU, you want to think about the feeling of spaciousness

• And we’ve got a lot of tricks we can use to make a small square footage feel very spacious. 

• But in a basement, a lot of those tricks are unavailable to us because we’re using existing walls, ceilings and floor.

  • High ceilings

  • Big French doors that open to the garden.

• But some tricks still work

  • Long uninterrupted lines of sight make a space feel bigger

  • Lots of light makes a place feel bigger (darkness will make a place feel smaller)

  • Think about varying the height or elements on the ceiling - if everything sits on one plane, it looks samey and feels smaller than if there’s some variation