Side-by-side photos of modular/prefabricated construction and traditional construction with a "versus" graphic in the middle for prefab ADUs vs site-built ones.

If you’re thinking of building a stand-alone accessory dwelling unit (ADU) you have several options. The most basic choice is between building it from the ground up or buying a prefabricated structure that is delivered to the site. 

Both options have benefits. So, it will be up to you to assess your priorities and see which are most important to you. For example, if you want complete design flexibility, build from the ground up. If you have budget constraints, prefab ADUs will probably be a better bet.

I’m busy planning an ADU build, and I’m going to be building from the ground up. But it’s not specifically because of the benefits of this option. It’s got more to do with local code requirements in this part of Florida. Also, I haven’t been able to find a prefab builder who can deliver what I need for less than I’m going to pay for building from the ground up.

So, there you go.

In this article, I’m going to share some of the invaluable info I have discovered while researching my own ADU build. I am sure it will help you assess the benefits of going with a prefab ADU versus building your new ADU from the ground up.

I’m going to discuss your options generally and in terms of what’s allowed in different areas. This means that I will also touch on some of the legal issues you need to be aware of. Then, at the end of the article, I will list the benefits of prefab ADUs and those built from the ground up.

Let’s dive in so that you can find out more.

ADU Options

ADUs come in many different shapes and forms. They also have different names, most of which add appeal to any property with an ADU, like a granny pod, backyard cottage, rental suite, or in-law apartment.

I talked about ADUs vs. tiny homes in a recent article that you can read here. ADUs provide affordable, effective options for second-dwelling housing on residential properties where a single-family home has already been built. They are often very small in size and may also be rented out or used for home offices or studios.

If you’re interested in the concept of an ADU, I bet you’re wondering about the different construction types. I know that I was when I decided to build an ADU.

Let’s start with the broader ADU options. You can:

  • Build it as a detached new construction unit like I’m going to do
  • Attach it as an addition to the main house
  • Construct it above an existing garage
  • Convert an attic, garage, or basement and take advantage of the existing structure of your home.
a red brick house with wood framing showing on the right side, with a ladder going up the window, to show an attached ADU being built on the existing home
Building an attached ADU can create a lot of flexibility for extra space, guests, AirBnB/VRBO short term rental income, long term income (12+ months), or many other uses!

We wrote another article here with a bit more details and pictures of each type of ADU as well, if you’d like to check that out.

As a general rule, if you opt for a detached, stand-alone unit, you can build from the ground up or buy a prefab ADU. These are both hugely popular options, so I’m going to share the benefits of one versus the other. But first, I’m going to run through some basics that relate to legalities for readers who don’t know much about ADUs.

Be warned that the legislation that governs ADUs in various areas differs. I learned this very quickly, and, ultimately, it’s what governed my choice. So, you will need to check with your local authorities before you go ahead and build an ADU from the ground up or decide to buy a prefab unit.

Legislation That Governs ADUs

We’ve been building ADUs in the U.S. for decades, and their popularity continues to increase throughout the country.

According to David Morley, AICP, a planner and research manager at the Chicago-based American Planning Association (APA), hundreds of cities and counties have embraced the concept of ADUs in the past 20 years. Many states have passed their own legislation that governs the construction of ADUs. They have also eased zoning laws.

Photo of a table with three people holding various papers and having a discussion. A balance is on the table to represent justice or law. Local laws impact whether prefab ADUs are an option in your location.
Your decision about an ADU rests on earlier decisions by lawmakers in your area.

This is where discrepancies and variable standards come in. Nevertheless, legislation is a welcome move because it forces builders to stick to local building codes, ensuring the quality of ADU construction.

For me, it means that I have to build an ADU that is constructed the same way and in the style of my concrete block home. Using concrete blocks for a prefab simply isn’t feasible. The local authorities are going to be checking up on me all the way, which I welcome.

One of the big problems in the past was that many local jurisdictions prohibited ADUs, which led to illegal structures popping up all over the place. Having an illegal structure on your property is not going to give you any real ROI because it will inevitably adversely affect resale. An illegal building may also be dangerous because it isn’t built to proper standards.

The irony is that by introducing legislation, cities and counties have effectively relaxed restrictions on ADUs in general. And by doing so, they have improved quality and increased potential ROI.

At the end of the day, the reality is that there is a desperate need for more affordable housing. Given the fact that single-family detached houses are usually built on relatively large properties, backyard ADUs can definitely provide a meaningful solution. So, we must get this right.

Types Of ADUs Allowed In Different Cities & Counties

While on the topic of legislation, it is also important to identify which types of ADUs are allowed in your state or city. This applies mostly to prefab units and to size in general.

Where they are allowed, all types must be smaller than the main house, and limitations in terms of maximum size are specified, often 800-1,000 square feet.

All types, including modular and other prefabricated ADUs, must be built according to local building codes and regulations.

In some areas, including California, so-called manufactured ADUs are allowed without permanent foundations. Many are, in fact, mobile homes that are built to federal standards. But here I am focusing on ADUs that incorporate a permanent foundation of some sort. 

Basic Differences Between Prefab & Ground Up ADUs

When we build from the ground up, we can use just about any building method, as long as it has local (city or state) approval. Stick-frame is common, but many people also opt to build ADUs with concrete blocks or bricks and mortar.

Prefab ADUs vary in type, but most utilize the same kinds of materials used for timber stick-built houses. Some have steel frames. They may be prefabricated in a factory and transported to the site:

  • In one piece
  • In modules that are positioned on site
  • In kit form that includes the framework, panel walls, floors, roof, and so on.
a picture with four pictures within it, all showing the construction of a half-built prefab modular home
Sometimes the modular ADU can come as a whole unit, or in pieces that you put together, almost like Legos!

The main difference between modular homes and panelized construction is that modules have everything from walls, floors, ceilings, roof, and plumbing to interior fixtures in place before they are delivered. Even though they are factory-made, panelized prefabs have to be assembled on site.

Both may be designed either as primary residences or smaller ADUs. The very nature and size of a single unit typically fits the ADU model.

The California Example

California is probably the leading state when it comes to tiny homes and ADUs. After major legislative changes in the state, ADU construction in California rose eleven-fold between 2017 and 2019.

  • In 2016, 1,269 permits were issued legitimizing ADU construction.
  • This figure increased to 14,702 in 2019.
  • In 2020, despite the impact of the COVID-19 pandemic 12,392 permits were issued.

In January 2020, the State introduced new laws that allow ADUs and primary single-family homes to be built at the same time. This can save substantially on utility installation as it will only have to be done once.

An aerial photo of a densely populated residential area in California. Prefab ADUs are part of the solution to California's housing crisis.
California’s population density is demanding new solutions for housing, such as ADUs.

New ADU funding laws introduced in January 2021 are adding an even more positive impact, as you can read here. State grants and financial incentives are what all U.S. states need.

But different cities have different options, so you, like me here in Florida, are going to have to do some homework to see whether going with a prefab ADU or building ground up is the best option. In the meantime, here are some benefits of both types that will help you make an educated assessment that relates to your needs.

Benefits Of Prefab ADUs

1. Lower Cost

Most prefab suppliers maintain that cost is one of the primary benefits of a prefab ADU. This stands to reason, because highly skilled on-site contractors carry a higher price tag than factory workers in manufacturing facilities. But before you make a decision based on cost, it’s vital to factor in what you are going to pay for transportation and a crane.

Even if Florida codes had made the option of a prefab ADU possible, delivery and crane costs would have negated any possible cost benefit. You can also run into costs of transportation where it will blow the budget. An example is shipping it 10 states over, where you have to pay for all the costs of trucking, wide-load permits, fuel, and everything associated with that. In some cases, just transport costs along will mean building ground-up will make more sense.

Where costs are lower, it isn’t necessarily because of the methods used for construction. Rather, it’s because companies center cost control around a business model that focuses on standardization.

The counter to this is that you are stuck with standardized styles. You pick a standard plan and your finishes, and that’s it. The challenge for the prefab manufacturer is to keep track of trends and meet evolving customer needs.  

2. Less Time

Certainly, prefab ADUs are installed much more quickly than a unit built from the ground up can be completed. Since the structure is put together in a factory, the time spent building it doesn’t need to be factored in. All you do is build the required foundation and then schedule delivery of your prefab ADU.

Of course, if there are delays in the factory that affect the timeline, time may not be a benefit after all.

3. Fewer Risks

Because most of the work is done in a sheltered factory environment, and very little time is spent on the site, weather and other unscheduled delays are minimized.

4. Cleaner Operation & Less Disruption

All building operations can be noisy and messy. Conversely, the speed with which a prefab ADU can be erected ensures a cleaner, much quicker operation with considerably less disruption for all. 

Benefits Of Building An ADU From The Ground Up

1. Architectural Style & Customization

Like any house, when you build an ADU from the ground up, you are limited only by your imagination and the ideas of your architect or designer. You can match the style of your existing home – which I am doing in Florida – and personalize all your options. It’s the very opposite of the standardized prefab ADU.

2. More Flexibility

If you need to make changes to your original design during the build, you can. It is also easy to modify and remodel this type of ADU over time. Prefab structures are undoubtedly more difficult to remodel. 

3. Increased Accessibility

You can build anywhere on your property without having to factor in the need to provide access for a truck or crane to deliver your prefab home. The reality is that not all sites are suitable for prefab and/or modular houses. Narrow streets, utility lines, and protected trees all reduce accessibility for prefab delivery methods.

This has been a big factor for me because there’s no alley at the back of the property and no access for a big crane to move pieces into place. There is no doubt that opting to build from the ground up gives my builders increased access.

Photo of a crane hoisting a wall into place on a construction site. Prefab ADUs often require the use of a crane to install them on your property.
Accessibility can have an impact on whether you choose to go with a prefab ADU.

4. Easier Financing

Generally, lenders are more comfortable financing more conventional homes. This matters to a lot of people.

5. ROI

Even if your prefab option is cheaper than building from the ground up, you need to look at its ultimate value and return on investment (ROI). Generally, the consensus is that traditionally-built ADUs will add more value to your home than a prefab unit. 

An Educated Assessment

While both prefab ADUs and those built from the ground up have benefits, it’s important to assess what is important to you. Are your priorities related to budget constraints, or would you rather spend a bit more money to ensure you get a good, solid ROI?

Are timeframes vitally important? Are you happy to build a standardized ADU or do you want to control architectural style and character?

These are just some of the issues I have addressed in this article. I hope that they will help you make an educated assessment so that you can get started with your own ADU project.

If you’d like to learn more, we examined a few more characteristics of whether prefab/modular homes were more efficient than ground-up built homes. You can check that out here!

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