Prefab or Traditional Construction – Which Should I Choose for My ADU?

For a homeowner who wants to add a detached ADU, there is an important choice to make:

  • Purchase a prefab or manufactured unit OR
  • Hire a company to do traditional “stick build” construction.

Here are some important factors to consider when making this decision:

  • Feasibility – A prefab unit is typically built in a factory, delivered on a flat bed truck and then lifted into the backyard using a crane. Sometimes, delivery to a property is not feasible. For example, power lines in front of the property may prevent the crane from lifting the unit into the backyard. Another infeasible situation is when a narrow road is the only way to access the property, and the road is not wide enough for the unit.
  • Cost – A prefab unit tends to be cheaper than a unit built with traditional construction in the San Francisco Bay Area due to the high cost of labor for construction.  Prefab units are also cheaper because architecture fees are typically smaller.
  • Sales Tax – The State of California requires the payment of sales tax on 40% of the price of the prefab unit.
  • Project Time – The time to complete a prefab ADU is typically less than a typical construction process. The design and permitting process for traditional construction takes longer.  Some prefab designs have already been approved by local governments.
  • Disturbance to homeowner – The installation team for a prefab unit will be on the homeowner’s property for a shorter timeframe because most of the construction occurs in a factory.
  • Customization – This is a major advantage for traditional construction. Prefab units come in pre-designed sizes and shapes with the windows and doors in specific locations. The size and shape of a unit may not fit the space that the homeowner has for the ADU. In addition, the homeowner may not like where the window is located on the prefab ADU.

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