A Comprehensive Guide To ADU Builds For California Contractors

Accessory Dwelling Units (ADUs) have emerged as a huge economic opportunity for both homeowners and contractors alike. The ADU market in California has experienced unprecedented growth, evidenced by a 50% increase in permit applications in 2022 compared to the preceding year. There’s a reason why – it represents a huge opportunity for both contractors and homeowners alike.

With bill after bill of pro-ADU legislation coming through the California legislature, the state is definitely making it easy for people to offer ADUs on residential property. If you’re a builder looking to take advantage of this new market or a person looking to make a little bit of extra cash, an ADU looks like an enticing opportunity. But make no mistake – building an ADU is no joke. It requires a lot of work, a lot of money, and a lot of regulatory legwork.

If you’re someone looking to build an ADU, either for yourself or your client – this guide will cover everything you need to know about ADUs and what it means to actually build one or enter the market as a specialty ADU contractor.

A Closer Look at the Historical Evolution

The trajectory of ADUs in California is marked by significant legislative milestones, each contributing to easing housing shortages. The introduction of Senate Bill 1069 in 2017 was a game-changer, relaxing parking and utility fee requirements and thereby catalyzing ADU developments.

Assembly Bill 68 in 2021 further expedited the approval process and allowed for multiple ADUs on single-family lots, setting the stage for a thriving ADU market with contractors steering this transformative shift

Navigating the intricate regulatory framework is paramount for contractors. The California Department of Housing and Community Development (HCD) outlines comprehensive guidelines encompassing zoning, size, and design, with local jurisdictions adding another layer of specificity. Contractors must meticulously consider:

  • Zoning Requirements: Adherence to varying local zoning ordinances is crucial, dictating the permissible locations for ADU construction and often adding to the cost.
  • Size Limitations: With a typical cap at 1,200 square feet, size regulations demand careful attention, considering the lot size and local variations.
  • Local Design Standards: Compliance with local design standards ensures that ADUs stay within local building codes like heights and lawn care.

Innovations and Trends: Crafting the ADU of Tomorrow

Innovation is at the heart of ADU construction, with contractors employing advanced technologies and sustainable methodologies to meet the evolving market expectations. Emerging trends include:

  • Sustainable Building Practices: The incorporation of features like solar panels, rainwater harvesting systems, and energy-efficient appliances is becoming the norm, reflecting California’s sustainability goals.
  • Modular Construction: The rising popularity of modular construction offers a blend of cost efficiency and time-saving benefits.
  • Smart Home Integration: The integration of smart home technologies enhances the appeal and functionality of ADUs, aligning with modern living expectations.

Statistics About the ADU Market in California in 2023

The ADU market in California in 2023 has witnessed significant developments, reflecting the evolving legal and economic landscape. Here are five noteworthy statistics:

  • Permit Applications: There has been a 60% increase in ADU permit applications in California in 2023 compared to the previous year, indicating heightened interest and activity in the ADU market.
  • Construction Costs: The average construction cost of an ADU in California is approximately $200,000, varying based on size, design, and location.
  • Rental Rates: Rental rates for ADUs in California have seen an average increase of 8%, making them a lucrative investment for homeowners.
  • Sustainability Trends: Approximately 70% of new ADUs constructed in 2023 have incorporated sustainable building practices, reflecting the growing emphasis on eco-friendly living.
  • Financing Options: The availability of ADU-specific financing options has increased by 25%, providing homeowners with more avenues to fund ADU construction.

Best Tips for Contractors Who Want to Enter the ADU Market

Establishing yourself in the piping-hot ADU market in California presents a golden opportunity for contractors. While every contractor’s situation is different, here are some general tips that will put you in the right direction when it comes to ADUs.

  • Stay Informed on Regulations: Regularly update knowledge on state and local ADU regulations to ensure compliance and stay ahead of any legislative changes.
  • Specialize in Sustainable Practices: Embrace and specialize in sustainable building practices to meet the growing demand for eco-friendly ADUs.
  • Build Relationships with Local Authorities: Foster relationships with local planning and zoning authorities to facilitate smoother permit applications and approvals.
  • Offer Customized Solutions: Provide tailored ADU designs and solutions to cater to the diverse needs and preferences of homeowners.
  • Engage in Community Outreach: Actively engage with communities to address concerns, build trust, and establish a positive reputation in the ADU market.
  • Budgeting and Financing: Providing accurate cost estimates and assisting homeowners in navigating financing options, such as ADU-specific loans and grants, is essential.
  • Site Assessment: Comprehensive site assessments identify potential challenges related to topography and utility access, enabling preemptive solutions.

Pros and Cons of Hiring a Contractor to Build Your ADU

As a homeowner, deciding whether to hire a contractor for your ADU build is probably the most important step you’ll make when building an ADU, because, obviously, you’re going to be the one building it if you don’t hire someone to build it!

Obviously, we think that most people would benefit from having a contractor build your ADU, but here are some pros and cons of bringing on an expert to take care of the building of your ADU property.


  • Expertise and Experience: Contractors bring a wealth of experience and expertise in construction, ensuring that the ADU is built to high standards and complies with all applicable regulations.
  • Streamlined Permitting Process: Navigating the permitting process can be challenging. Contractors are familiar with local ordinances and can streamline the application and approval process, saving homeowners time and hassle.
  • Quality Assurance: Hiring a contractor provides quality assurance, as they are accountable for the workmanship and must adhere to industry standards, reducing the risk of construction errors and subsequent costs.
  • Time Efficiency: Contractors manage the construction timeline efficiently, coordinating with subcontractors and suppliers, which can expedite the building process compared to a DIY approach.
  • Less Stress: Building an ADU can be stressful. Having a contractor manage the project alleviates the burden on homeowners, providing peace of mind throughout the construction journey.


  • Cost Implications: Hiring a contractor can be more expensive than a DIY approach due to labor and management costs. Homeowners need to weigh this against the potential costs of mistakes and delays if they were to manage the project themselves.
  • Less Personal Control: While contractors consult with homeowners, there may be less personal control over every detail of the construction process, which might be a drawback for those who prefer a hands-on approach.
  • Potential Communication Gaps: Homeowners may experience communication gaps or misunderstandings with the contractor, which can affect the project’s outcome. Clear and consistent communication is essential to mitigate this risk.
  • Finding the Right Fit: Identifying a reliable and qualified contractor can be time-consuming. Homeowners need to conduct thorough research, check references, and obtain multiple quotes to find the right fit for their project.
  • Contractual Disputes: There is a risk of disputes arising over contractual agreements, such as costs, timelines, or work scope. A well-drafted contract and open communication can help prevent and resolve any issues.

The Final Word

If you’re a contractor looking to get into ADUs, now is the time. The longer you wait to become a trusted ADU contractor in your area, the more competition there will be when you finally take the plunge.

The good thing is you don’t need a specific CSLB license to build an ADU – at the very least, you only need a Class B license, or, if you’re a homeowner modifying your own property, and the materials cost less than $600, you can build your own ADU. We have to be honest, though, that’s unlikely unless you’re just installing a new shelf or something. Considering the average cost of an ADU is $200,000, that’s highly unlikely.

Additional Reading

LA Times – Deep Dive on ADUs
California Legislative Information – Senate Bill 1069
California Legislative Information – Assembly Bill 68
California Department of Housing and Community Development – ADU Handbook
Terner Center for Housing Innovation at UC Berkeley – The State of ADUs in California
California Contractors State License Board – Owner-Builder Responsibilities
California Department of Housing and Community Development – ADU Construction and Financing
California Housing Partnership – ADU Market Trends and Statistics
U.S. Green Building Council – Sustainable ADU Construction in California

This entry was posted in Construction, Construction Technology, Contractor Business, Contractor Jobs on by .

About CSLS

Contractors State License Service (CSLS) is the largest school in California devoted to the Construction professional. For over 23 years, CSLS has helped its students pass the exam to become licensed contractors in the State of California, licensing more students than any other school. From our main offices in Southern California, CSLS operates over 25 locations with full-service support and classrooms. We have grown to this extent by providing quality, professional services. In comparison, this provides 7 times the number of convenient locations than the second largest contractor school. Contractors State License Services is one of the only contractor schools in the state that is run by educators, not lawyers or people mostly interested in the bonding and insurance business. Contractors State License Services formerly operated under the oversight of the State of California's Bureau for Private Post Secondary and Vocational Education. As of January 1 2010, the new Bureau for Private Postsecondary Education (BPPE) came into existence replacing the BPPVE. CSLS now operates under the provisions of the California Private Postsecondary Education Act of 2009 (CPPEA), Article 4 Section 94874(f). Our Mission is simple; We can help you pass your California Contractors License Exam. Celebrating our 25th year, CSLS has helped over 120,000 students pass the California contractor licensing exam to become licensed contractors in the State of California. Additionally, we offer complete home study and online contractor’s license programs to help you pass your California contractors license exam. CSLS offers licensing classes for all types of contractor licenses, including General Engineering Contractor, General Building Contractor, Specialty Contractor, Insulation and Acoustical Contractor, Framing and Rough Carpentry Contractor, Cabinet, Millwork and Finish Carpentry Contractor, Concrete Contractor, Drywall Contractor, Electrical Contractor, Elevator Contractor, Landscaping Contractor, Warm-Air Heating, Ventilating and Air-Conditioning Contractor, and many others. For a complete list of contractor licenses, visit www.MakeMeAContractor.com and tuned for more informative posts.