How Much Does It Cost to Build a Guest House in 2025?
Building a guest costs an average of $85,000.
Plan on spending between $62,000 and $225,000, depending on your design choices and location.
Where you live, how big you build, and the materials you pick all shift the final price.
Don’t forget to budget for big-ticket line items like roofing, plumbing, and electrical work.
A well-built guest house can lift your home’s value and even generate rental income.
This article was updated using automation technology and thoroughly reviewed for accuracy by HomeAdvisor Editor Ryan Noonan.
Building a guest house on your property will cost around $85,000, with a typical range between $62,000 and $225,000. Costs swing widely based on where you live, how big you build, and the quality of materials and labor you choose, so knowing the range up front helps you set a realistic budget.
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.
Guest House Cost Factors
Your final price tag comes down to square footage, the style of build, where you live, the materials you choose, plus extras like roofing, wiring, or luxury finishes.
Size
Size is the single biggest budget driver. The more square footage you add, the more materials and labor you’ll need—so costs climb quickly. Depending on the build type, expect to pay roughly $110 to $250 per square foot. A modular unit sits at the lower end (and lasts about 35 years), while a custom build commands more up-front cash yet can serve your family for a century or longer.
| Square Footage(Approx.) | Prefabricated Cost Range | Custom Build Cost Range |
|---|---|---|
| 300 | $27,000–$53,000 | $45,000–$95,000 |
| 400 | $31,000–$59,000 | $55,000–$110,000 |
| 550 | $40,000–$88,000 | $80,000–$140,000 |
| 800 | $65,000–$110,000 | $115,000–$210,000 |
| 1,200 | $89,000–$160,000 | $170,000–$330,000 |
| 1,500 | $102,000–$220,000 | $210,000–$380,000 |
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
Where you live matters. High-cost markets like California or New York push up labor and material prices, while lower-cost states—think Tennessee or Michigan—keep totals down.
| State | Average Cost for 600 Sq. Ft. Guest House |
|---|---|
| California | $110,000–$200,000 |
| New York | $125,000–$220,000 |
| Washington | $103,000–$185,000 |
| Tennessee | $80,000–$150,000 |
| Florida | $95,000–$175,000 |
| Texas | $90,000–$165,000 |
| Alaska | $125,000–$240,000 |
| Hawaii | $115,000–$230,000 |
| Michigan | $70,000–$120,000 |
| Wyoming | $90,000–$135,000 |
| Colorado | $120,000–$210,000 |
Plumbing Installation
Set aside at least $10,000 for basic plumbing and $20,000 or more for larger layouts. Local plumbers usually bill $50 to $200 an hour, so complex rough-ins add up fast.
Electrical
Plan on roughly $8,000 for a full electrical rough-in, with electricians charging $70 to $200 an hour.
Roofing
Budget about $8,000 for a new guest-house roof. Most homeowners see $4 to $11 per square foot, depending on material, and roofers typically quote by size (or $25 to $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.
| Feature | Average Cost Range |
|---|---|
| High-end appliances | $6,000–$13,000 |
| Heated floors | $5,000–$16,000 |
| Granite countertops | $2,500–$9,000 |
| Sauna | $1,900–$5,000 |
| Wrap-around deck | $18,000–$36,000 |
| Security system | $2,000–$7,000 |
| Custom lighting | $1,500–$8,500 |
| Luxury bathroom finishes | $2,500–$8,000 |
| Solar panels | $12,000–$25,000 |
| Custom cabinetry | $5,000–$45,000 |
| HVAC installation | $5,000–$12,500 |
Other Guest House Cost Factors
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
Building permits for a guest house can range between $600 and $3,000.
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.
Does Building a Guest House Increase Home Value?
When a licensed pro handles the build, a guest house almost always bumps up your property value. Some owners list the space as a short-term rental; others use it as an accessory dwelling unit for steady income—helping the addition pay for itself over time.
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.
Frequently Asked Questions
In most states, yes—you can build a guest house, but every city or county sets its own zoning rules and building codes. Before breaking ground, check local ordinances, confirm lot setbacks, and secure the right permits. A local contractor or design-build firm can walk you through the paperwork and site requirements so your project starts on solid legal footing.
Yes—homeowners often tap a few different financing tools. A home-equity line of credit (HELOC) lets you borrow against your equity as you need funds. If you prefer a lump sum tied directly to the project, a short-term construction loan can roll into a second mortgage once the build is complete. Cash-out refinancing is another option: you replace your current mortgage with a larger one and use the difference to cover construction costs.
When you build a guest house, you’re creating a separate structure for hosting visitors without the full amenities needed for permanent living. An accessory dwelling unit, however, includes a complete kitchen and bathroom, meeting building codes for a long-term residence. This key difference makes an ADU ideal for long-term occupancy or rental income, adding enduring value to your property.
How many rooms you need depends on how you plan to use the space. Aim for one bedroom per every one or two occupants to make sure everyone has enough privacy and comfort. Added living and dining areas give you extra functionality, especially for rental use or long-term stays.
Most homeowners pick somewhere between 600 and 1,500 square feet to fit all the essentials. Make sure your design supports one to two occupants per bedroom and includes enough common areas for comfortable daily living. A well-proportioned layout boosts both functionality and property value.
No—a guest house isn’t just a bump-out on your main home. A bump-out is a small extension within an existing room for extra seating or storage. In contrast, you build a guest house as a standalone building with its own foundation and amenities, giving you a fully separate living area that can boost your property’s versatility and value.
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