How Much Does It Cost to Build a Guest House in 2025?
Typical Range:
$5,000 - $100,000
Cost data is based on research by HomeAdvisor.
Highlights
The average cost to build a guest house is $55,000, with prices ranging from $5,000 to $100,000.
The size and type of house have the largest impact on price. The larger and more customized the home, the more it costs.
When building a guest house, you can opt for a prefabricated model, convert an existing structure, or build a custom home from scratch.
General contractors typically charge 15% to 25% of the total project cost rather than an hourly rate.
Building a modular 600-square-foot guest house costs $55,000 on average. The cost of materials, building permits, and installation typically range from $45,000 to $65,000 but can run up to $100,000 or more, depending on the house size, type, and location.
Hiring a general contractor to manage the project requires a fee of 15% to 25% of the total project cost. They’ll oversee the entire project, so you won’t have to worry about hiring additional subcontractors, such as roofers and electricians, separately.
Average Cost to Build a Guest House
| Average Cost | High Cost | Low Cost |
|---|---|---|
| $55,000 | $100,000 | $5,000 |
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Guest House Cost Factors
The cost of building a house depends on its size, type, location, materials, roofing, electrical and plumbing systems, and any additional features you include.
Size
Size is the most influential factor in determining the cost of a guest house. The larger the home, the more labor and materials it requires, therefore the higher the price. Depending on the type of guest house, you'll pay an average of $110 to $250 per square foot. Modular homes are on the lower end but only have a lifespan of 35 years. Custom builds are more expensive but can last more than 100 years.
| Square Footage | Prefabricated Cost Range | Custom Build Cost Range |
|---|---|---|
| 600–700 | $45,000–$65,000 | $60,000–$350,000 |
| 700–800 | $49,000–$88,000 | $70,000–$400,000 |
| 800–900 | $56,000–$99,000 | $80,000–$450,000 |
| 900–1,000 | $62,000–$110,000 | $90,000–$500,000 |
| 1,000+ | $70,000+ | $100,000+ |
Home Type
The type of guest house you build also impacts your final bill. Custom guest houses are the most expensive, while conversions and prefabricated models are more budget-friendly.
Custom Guest House
Generally, you’ll pay between $100 and $500 per square foot to build a custom guest house. For a 600-square-foot cottage, the cost ranges from $60,000 to $300,000. Building a brand-new structure involves significantly more materials, permits, and labor than a prefabricated model. Some potential costs you’ll incur include:
The cost to install insulation ranges from $1–$5 per sq. ft.
The cost of foundation ranges from $5–$37 per sq. ft., depending on the material.
The cost of drafting blueprints ranges from $800–$2,700.
You’ll also have to incorporate the cost of hiring an architect to design your home, which ranges from $2,200 to $11,600.
Converting a Garage or Shed
Converting an existing structure, like remodeling a shed, is usually more cost-effective than building something new. The average cost of converting a garage or shed ranges between $110 and $120 per square foot. Most conversions will run you between $15,000 and $30,000. Expect to go beyond this price range if you need extensive plumbing or other work to bring the space up to building code.
Prefabricated
Small, prefabricated structures like tiny homes are easy to find and widely available online at affordable prices. Options range from $5,000 to $100,000 for a ready-made kit. However, that doesn’t include the cost of permits, labor, plumbing, and electricity, which can increase the price by up to $10,000 or more.
Location
Location plays a significant role in the cost of building a guest house. If you live in an area with high property values, such as California or New York, you’ll often pay more for materials and labor than in a lower-cost state like Tennessee or Michigan.
| State | Average Cost for 600 Sq. Ft. Guest House |
|---|---|
| California | $110,000–$200,000 |
| New York | $125,000–$220,000 |
| Florida | $95,000–$175,000 |
| Texas | $90,000–$165,000 |
| Tennessee | $80,000–$150,000 |
| Hawaii | $115,000–$230,000 |
| Michigan | $70,000–$120,000 |
| Colorado | $120,000–$210,000 |
Plumbing Installation
Installing plumbing in a new structure is nearly equivalent in cost to that of an original structure. For example, a backyard guest house with a bathroom needs just as many plumbing fixtures as the bathroom in your main estate.
The average cost to install plumbing ranges from $7,500 to $15,000, depending on the type and amount of piping material and the number of plumbing fixtures in your addition. The cost to hire a plumber ranges from $180 to $500.
Electrical
Installing new electrical wiring in a guest house ranges from $2,000 to $5,000. The amount of outlets and light switches, the necessary building permits, labor costs, and the square footage of the space determine the final prices. The cost to hire an electrician typically ranges between $160 and $550.
Roofing
The average cost to install a new roof on a guest house is $8,000. Prices range from $4 to $11 per square foot, depending on the roofing material. Roofers may charge you by the project size or hourly, with most rates falling between $25 and $75 per worker per hour.
Materials
The type of construction materials you choose significantly impacts the total cost. Budget-friendly materials like wood or vinyl siding cost much less than high-end materials like brick or stone. Wooden frame houses typically range between $150 and $200 per square foot, while brick or stone houses range from $200 to $300 per square foot.
Features
The more features your guest house has, the higher the price. Sticking to essential features helps keep costs down while adding high-end features such as custom cabinetry, air conditioning, and luxury finishes will increase the price.
| Feature | Average Cost Range |
|---|---|
| High-end appliances | $6,000–$13,000 |
| Solar panels | $12,000–$25,000 |
| Custom cabinetry | $5,000–$45,000 |
| Wrap-around deck | $18,000–$36,000 |
| Central air conditioning | $3,000–$5,000 |
| Heated floors | $5,000–$16,000 |
Other Guest House Cost Factors
When building a guest house, you’ll also have to consider the cost of labor, permits, site preparation, property taxes, and ongoing expenses.
Labor
Unlike smaller projects, contractors won’t charge an hourly or size-based rate when working on a custom build. Instead, they’ll charge a fee of 15% to 25% of the total cost to manage the entire project. This general contractor fee typically includes everything from hiring subcontractors and sourcing materials to overseeing construction and managing schedules.
Permits
Like any other new construction, building a guest house requires a building permit. Building permits cost between $1,200 and $1,500, depending on your location. Most homeowners pay an average of $1,170 in permits for a custom build.
Check with your homeowner’s association about any special permits you may require. Adding features such as a fence or privacy screen often have additional requirements.
Site Prep
Demo and site preparation costs depend almost entirely on the space size and existing structures. For example, preparing for a backyard guest house may not necessarily involve demolition. On the other hand, tearing down a shed or garage before clearing the area will cost more because of the additional labor required.
On average, it costs between $2,000 and $9,000 to demolish a small structure below 1,000 square feet, like a shed or garage. Disposal and cleanup services range from $300 to $1,800.
Property Taxes
What you pay in property tax is based on your home’s value. A new guest house will undoubtedly increase your home’s value, so you will likely see a 20% to 50% increase in your property tax bill. The total increase depends on where you live, local tax rates, and the specifics of your guest house. Your local tax assessor will likely visit to reassess your property taxes as they monitor local building permits.
Ongoing Costs
Your utility bill will increase based on how much energy it takes to power your new guest house. If you only have occasional guests, your bill likely won’t increase by much, but only if you ensure everything is turned off when the guest house isn’t in use. If you rent out your guest house regularly or have a long-term visitor, your energy bill will increase accordingly.
Does Building a Guest House Increase Home Value?
Guest houses almost always increase home value when built by a licensed professional. Many homeowners rent their cottages as vacation rentals, while others turn theirs into accessory dwelling units for long-term tenant rental. This extra income source provides homeowners with a quick turnaround of ROI. In some instances, the guest house could pay for itself.
Conversely, a poorly built guest house (or even some prefab units) could harm your home’s value. Prefabricated or modular homes require regular maintenance to ensure they last. If you try to sell your property 30 years from now with a broken-down guest house, it will almost certainly lower your ROI.
Budgeting for Building a Guest House
It’s not impossible to build a guest house on a budget. Consider the following money-saving tips to keep your costs low:
Opt for a small, prefabricated model rather than a custom build. A tiny 130-square-foot escape in your backyard can cost as little as $5,000.
Use what you already have and convert an existing space rather than building an entirely new structure.
While most of the work should be left to a contractor, you can do small jobs like painting or disposal to reduce labor costs.
Check for sales or bulk discounts on materials at your local hardware stores.
Compare quotes from multiple local home builders to find the most budget-friendly option in your area.
How HomeAdvisor Gets Its Cost Data
No place is more important than your home, which is why HomeAdvisor connects homeowners with local pros to transform their houses into homes they love. To help homeowners prepare for their next project, HomeAdvisor provides readers with accurate cost data and follows strict editorial guidelines. After a project is complete, we survey real customers about the costs to develop the pricing data you see, so you can make the best decisions for you and your home. We pair this data with research from reputable sources, including the U.S. Bureau of Labor Statistics, academic journals, market studies, and interviews with industry experts—all to ensure our prices reflect real-world projects.
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FAQs
Can I build a guest house on my property?
States allow you to build a guest house on your property, but each municipality has different rules and building codes. Some states are more lenient than others, but every build and remodel needs an approved permit before beginning. Contact a local home builder to learn more.
You might not be able to build on your property if you live in a historic district or have an HOA. Do some research in your area to find out specific rules.
Can you finance a guest house?
Yes, you can finance a guest house in several ways. HELOCs, or home equity lines of credit, allow homeowners to borrow money from a lender by using their home equity as a guarantee. Others use construction loans, which are short-term options that cover the costs of building and materials from start to finish and become another mortgage when the project is done.
Before or after your guest house is complete, you can find ways to fund your project by refinancing your home. At the start of a project, consider using cash-out refinancing to replace your old mortgage with a new one and use cash from that increase to fund your build. Alternatively, you can have someone assess your home after the build to determine the increase in property value and potentially reduce your existing mortgage.
What’s the difference between a guest house and an accessory dwelling unit?
An accessory dwelling unit (or ADU) always has at least one kitchen and one bathroom, while a guest house cannot have a kitchen because building codes do not consider it a permanent residence.
