Build or buy?

Add a unit, or buy another property?

Most calculators tell you what an ADU costs. That is the easy half. The question worth answering is whether building one beats buying a second property instead, and that depends on numbers only you know. Put yours in.

How big a unit are you thinking about?
Size1,200 sq ft

1,200 sq ft is the ceiling for a detached new-build ADU in unincorporated Sacramento County. Other jurisdictions differ.

What would the other property cost to buy?

An older home of a similar size. In Rancho Cordova that is around $500,000 at the time of writing.

What do you think it would need spending on it?

Your estimate, not mine. This is the number people get wrong most often on older stock. Roof, systems, kitchen, bathrooms, windows — it adds up faster than expected, and it is the difference between the two options being close and not being close at all.

$237,000 less to build

Buy another property

Purchase price$500,000
Renovation, your estimate$75,000
Closing costs~$13,000
Down payment20–25%
FinancingInvestment rate
Property taxReassessed in full
Total in~$588,000

Build a unit on what you own

Build cost$300,000 – $432,000
RenovationNone, it's new
Closing costsNone
LandAlready yours
FinancingHELOC or construction loan
Property taxOnly the new build assessed
Total in~$366,000
The part most people miss. Property tax on the two routes does not land the same way.
If you buy
If you build

What building costs you that buying does not

  • Your land. The yard is gone, or most of it. On a small lot that is a real loss, and it can affect what the main house is worth to a family buyer.
  • One property instead of two. Two properties spread your risk across two markets, two sets of tenants and two exit options. A unit on your own lot concentrates everything in one place.
  • Lower rent than a whole house. A 1,200 sq ft unit does not command what a 1,200 sq ft detached home with its own lot does. It is close, but it is not the same.
  • Six to ten months, not thirty days. A purchase closes in about a month. A build runs six to ten months through design, permits and construction, and you carry the cost while it happens.
  • You cannot sell half of it. An ADU is attached to your property. If you need out, you sell the whole thing, not the unit.

If a calculator only shows you one side, it is selling you something. These are the reasons buying sometimes wins, and on the right property it does.

Where these numbers come from. Build costs use $250–$360 per square foot, the same range as the ADU cost calculator, reflecting current Sacramento-area pricing for a detached unit. Closing costs are estimated at 2.5% of the purchase price. Property tax uses a blended 1.15% including local assessments. Utility connections sit outside the build figure and depend on how far services are from the unit. Every one of these moves on a real property, which is what the free visit is for.

Why I can answer this and most agents cannot

An agent can tell you what the other property costs. A contractor can tell you what a build costs. The question you actually have sits between those two, and it needs both numbers on the table at once.

Send me the address and I will do this properly for your lot: what it can take, what the build would genuinely run, what the finished unit would rent for, and what is on the market right now that might beat it. Sometimes buying wins. You should know which before you commit.

Request a free consultation See what my lot can take

Want the real numbers for your property?

This gives you a defensible ballpark. Turning it into something you can act on takes one visit, and it costs nothing.

Request a free consultation