Cheapest Way to Build a Mother-In-Law Suite

What Is a Mother-in-Law Suite?

A mother-in-law suite, also known as an in-law suite, is a separate living space on your property that’s either attached or detached from your home. Typically, an in-law suite will have a separate entrance, kitchen, bathrooms, and bedrooms. One of the cheapest ways to create an in-law suite is to convert an existing space, such as a basement, shed, garage, or attic.

Other methods for building a mother-in-law suite include adding attached or detached accessory dwelling units (ADUs). Attached additions can be built onto the side or back of your home or created from existing areas. Detached in-law suites are separate structures built on your property. You can build new or convert detached garages, pool houses, or sheds. These suites can house relatives, overnight guests, as well as long-term or short-term renters.

Top Benefits of Building a Budget-Friendly Mother-in-Law Suite

Mother-in-law suites have numerous benefits, ranging from increased space to boosted property value. Here’s a closer look at the various advantages to an in-law suite:

• Boosts Property Value: In-law suites can boost California property values by about 7% to 10%. The amount of the increase varies depending on materials and finishes used, added square footage, and market conditions.
• Potential Rental Income: Despite the name, mother-in-law suites don’t have to house in-laws. You may decide to use the space as a full-time or part-time rental space.
• Increased Livable Space: Mother-in-law suites are ideal for multigenerational families. They keep you and your family members but also offer more privacy than guest rooms or basement apartments.
• Long-Term Savings: In-law suites are a cost-effective alternative to putting your parents or in-laws in a nursing home or hiring caregivers to look after them.

What’s the Cheapest Way to Build a Mother-in-Law Suite?

The cheapest way to build a mother-in-law suite is to convert an existing space. This is known as an interior in-law suite. Converting a basement, garage, attic, or shed eliminates costs associated with land preparation, building a foundation, putting up walls, installing or altering plumbing and electrical systems, etc. Prefab ADU additions are also a budget-friendly way to building an in-law suite. A prefabricated ADU is built off-site, then transported and installed on your property. This reduces construction costs and time.

Here’s a list of the average costs for converted, attached, and detached mother-in-law suites:

• Interior In-Law Suite: In California, interior mother-in-law suites can cost anywhere from $5,000 to $200,000.
• Attached ADU: The average cost of an attached ADU in-law suite in California is $106,000 to $216,000.
• Detached ADU: Prefab detached in-law suites cost between $50,000 and $125,000. Customized and new construction mother-in-law ADUs can cost up to $300,000.

Cost Comparison: Garage Conversion vs. New Construction

Here’s a simple cost compassion for an in-law suite garage conversion vs. new construction build:

Tips to Save Money When Building an In-Law Suite

The following are a few great tips that can help you save money while building a mother-in-law suite:

• Connect the new plumbing to your existing plumbing.
• Keep it simple by avoiding over customization, complex designs, or high-end features.
• Lower long-term expenses with energy efficient appliances, smart-home technology, and fixtures.
• Consider installing a kitchenette instead of a full kitchen.
• Use standard or basic materials and finishes.

Permit Requirements to Build a Mother-In-Law Suite

Permits are required to build onto a residential building or property, alter the use or purpose of a space, and to install, relocate, or alter plumbing, electrical, and HVAC systems. You’ll need to submit your permit application(s) to the city building department, along with official site plans and potentially a land survey if you’re building an ADU.

Affordable Financing Options for Building an ADU

Even the cheapest ways to build a mother-in-law suite can be daunting. Fortunately, there are various financing opportunities you can consider. Here is a brief overview of each affordable financing option for building an in-law suite:

Cash-Out Refinance

Cash-out refinancing allows you to refinance your mortgage and borrow more than your current balance. You then receive the difference in cash to help you pay for your in-law suite. This option is worthwhile as there’s the potential for lower interest rates than those of typical mortgage loans.

Home Equity Loan (HELOAN)

HELOANs are a type of second mortgage which allows you to borrow on the tappable equity in your property. You receive the entire sum of the loan upfront, and then repay it through fixed payments with fixed interest rates on a predetermined schedule.

Home Equity Line of Credit (HELOC)

HELOC allows you to leverage your property equity with a revolving line of credit similar to a credit card. You can borrow as you need and only have to pay interest on the amount you used on the in-law suite.

Construction Loan

Construction loans provide financing specifically for the construction phase of your project. One notable advantage of this type of loan is that you can make interest-only payments throughout the construction stage. Following construction, the loan is often converted to a permanent mortgage.

Debt Service Coverage Ratio (DSCR) Loan

Rather than mortgage based, DSCR loans are based on the property’s ability to cover debts through generated income. You must have a clear plan outlining how the in-law suite rental income will cover loan payments in order to acquire this loan.

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