ADU Construction in Carmel

Why Carmel is a Strong Market for ADU Construction

Carmel homeowners are increasingly building ADUs for extended family, home offices, and rental income. The area’s strong property values and luxury standards make ADU investment a sound decision. The Monterey Peninsula’s resort-style character and appreciation for architectural quality make it a distinctive market.

Custom Home builds ADUs in Carmel with the same two-phase design-build process we use for custom homes. You see the complete design in 3D and receive itemized pricing before any construction begins.

Types of ADUs We Build in Carmel

Detached ADUs

A standalone structure in your backyard, typically 400-1,200 sqft. Detached ADUs offer the most privacy and design flexibility. They work well for rental units, home offices, or multigenerational living. Construction costs in Carmel typically range from $375K to $650K.

Attached ADUs

Built as an addition to your existing home, sharing at least one wall. Attached ADUs are typically more cost-effective than detached units since they share structural elements with the main house. They are a good fit for family members who want proximity while maintaining separate living spaces.

Garage Conversions

Converting an existing garage into a living space is the most affordable ADU option in Carmel, starting from $200K. Since the structure already exists, you save on foundation, framing, and roofing costs.

Carmel ADU Permitting

Carmel-by-the-Sea requires all new construction and significant exterior modifications to go through the city’s Design Review Board before building permits are issued. This review process evaluates architectural compatibility, materials, colors, and site planning. Combined with standard plan check, the full approval timeline for a custom home can range from 4 to 8 months. Custom Home’s design team prepares thorough submissions that address all Design Review Board criteria, helping to minimize revisions and delays.

Custom Home manages the entire ADU permitting process in Carmel, preparing plans that meet local requirements for efficient review and approval.

ADU Rental Income Potential in Carmel

Carmel’s rental market supports strong returns for ADU owners. Estimated monthly rental rates:

• Studio/1-bedroom (400-600 sqft): $2,800-$3,300/month
• 1-bedroom (600-800 sqft): $3,200-$4,200/month
• 2-bedroom (800-1,200 sqft): $4,000-$4,500/month

At these rates, many ADU investments pay for themselves within 7-12 years through rental income alone, not counting the property value increase that a permitted ADU provides.