What Is A Granny Flat? An Essential Home Addition Guide

Key Takeaways

• As housing prices rise in San Diego and multigenerational living becomes more common, homeowners are increasingly turning to accessory dwelling units, or ADUs, for added flexibility, building what is known as a granny flat or in-law suite.
• Though these granny flats may be used initially to provide affordable housing for extended family, they offer a wide range of benefits throughout their lifetime, including as a source of potential rental income or extra space for guests.
• Granny flats can be new builds, garage conversions, or even built within the walls of the existing home, which is known as a junior ADU or JADU, and customized to fit various needs.
• Granny flats typically cost between $150,000 and $300,000 to build, and most homeowners find they’re worth the investment, as they allow the same single-family property to work for multiple generations.

A well-placed granny flat transforms underutilized yard space into high-value, income-generating square footage—without compromising your main home.

What Is A Granny Flat?

Granny flats, also referred to as in-law-suites, backyard cottages, and garden cottages, are small, independent living structures built on the same lot as the primary dwelling. 

But are granny flats the same thing as accessory dwelling units (ADUs)? Not necessarily.

Many times, granny flats are built within the walls of an existing home. Homeowners may convert a basement, for example, and include a kitchenette, a small living area, and a bedroom, but have the granny flat share a bathroom with a main house. This wouldn’t be considered an ADU, but rather a JADU, or junior ADU.

To be considered a true ADU, a structure must:

• Be no larger than 1200 square feet
• Contain a kitchen with cooking appliances and sink (appliances like hot plates don’t count)
• A bathroom with a toilet, a sink, and a shower or tub

To read more about what qualifies as an ADU, you can read our separate blog post here.

Granny flats fit naturally into San Diego neighborhoods—make sure your design complements the surrounding homescape.

The Different Types of Granny Flats

There are several types of granny flats to consider. The differences between each have to do with the method of construction.

• Detached Granny Flats: This describes a new, standalone housing unit constructed from scratch on the same property as a single-family home, usually in the backyard. These can range in size from 300 square feet to 1,200 square feet.
• Attached Granny Flats: These are independent living units that are built, essentially, as an addition to the primary dwelling. By California law, attached ADUs can be up to 50% of the existing home’s square footage, or 1,200 square feet—whichever is less.
• Garage Conversion Granny Flats: An unused detached garage is converted into a self-contained living area. These offer the same functionality and return on investment as a new, detached structure but for as little as half the cost.
• Junior ADU Granny Flats: Basements or extra bedrooms are converted into an in-law suite that may or may not contain its own bathroom.

Sometimes, people compare granny flat ADUS to tiny homes, but these two structures are different. The biggest difference is that ADUs have a permanent foundation, while a tiny home can be on wheels. You can read more about tiny homes vs ADUs here.

Detached units offer the greatest design freedom—plan for future rental use by including separate utilities and private access early in construction.

Advantages and Disadvantages of Granny Flats

Granny flats are a huge investment of time, money, and energy. But is it worth it? Here are some things to consider:

Advantages of building a granny flat include:

• Space for Family Members: Granny flats provide housing for elderly parents or even adult children, without having to move and contend with the expensive San Diego real estate market.
• Rental Income: While you may be building the structure as a place to house aging relatives, in time, you may be able to lease the unit to tenants to generate tens of thousands in passive income.
• Flexible Living Arrangements: If you don’t choose to rent out your granny flat, you can still repurpose it as a guest house, art studio, or home office
• Property Value: Granny flats increase overall property value, sometimes by as much as 35%.

Disadvantages of building a granny flat include:

• Building Costs: Permitting and construction of these units can be as much as $300,000 or more.
• HOA Restrictions: While homeowners associations can’t ban the building of ADUs outright, they can place restrictions on appearance and maximum size.
• Loss of Yard Space: Building a second structure can take away valued outdoor space, especially on a smaller lot.

ADUs can boost property value by up to 35%, especially in high-demand areas—consider location-specific ROI before starting your build.

Key Granny Flat Solutions: Sizes and Amenities

While San Diego allows ADUs to be as large as 1,200 square feet, most of the granny flat ADUs we build fall between 400 and 1000 square feet.

They also typically contain amenities like:

• At least 1 bedroom (though some homeowners opt for 2 bedrooms for more of a single-family feel)
• A full kitchen
• A full bathroom with a walk-in shower
• Separate entrance for privacy
• In-unit laundry
• Wider hallways and one-story living

Because many of these features, like a walk-in shower and wider hallways, have to do with long-term accessibility, granny flat ADUs often benefit from custom designs as opposed to prefab or manufactured ADUs.

The Cost to Build a Granny Flat

The average cost to build a granny flat in San Diego or similar markets ranges from $100,000 to $300,000, depending on the building type, square footage, and finishes.

Typically, we tell homeowners to anticipate spending:

• $100,000 – $150,000 for a JADU
• $150,000 – $250,000 for a garage conversion ADU
• $300,000+ for a new, detached ADU

Where your build falls within this range depends on how big your ADU is and what finish you choose to include.

The good news is that the state of California has made many financing options as a way to incentivize the construction of ADUs and combat the state’s housing crisis.

Site prep and foundation work often represent a significant chunk of your ADU budget—plan accordingly and pad your contingencies.

Regulatory Factors to Consider Before Building a Granny Flat

Though California does incentivize the building of ADUs, there are still state and local regulations that need to be followed to get your building permit approved. These include:

• ADU setbacks from property lines
• Parking requirements (which may be waived if you’re close to public transit)
• Minimum and maximum size limits
• Accessibility requirements for certain unit types

Each jurisdiction has its own building department and permitting process, so check with your local agency or partner with an experienced ADU designer & builder.

Always verify setback and zoning regulations before framing—changes at this stage are costly and can delay your build.

Designing Your Ideal Granny Flat: Floor Plans and Inspirations

When it comes to granny flats, design aesthetics can run the gamut from ultra modern to California coastal to traditional cottage. Whatever the aesthetic, granny flats contain common design features including:

• Open-concept living
• L-shaped or U-shaped kitchens to maximize cabinet space
• High ceilings and light color schemes
• Built-ins and other custom storage solutions

As for how this comes to life as a floor plan, we have many free floor plans you can view. Some popular 1-bedroom plans are here, and 2-bedroom plans are here.

Design isn’t just aesthetic—it’s strategic. Use natural light, ceiling height, and open-concept layouts to make smaller spaces feel expansive.

How to Select Your Granny Flat Builders

The most important thing when choosing a granny flat builder is to find someone who’s experienced with ADUs and granny flats specifically, as opposed to a general contractor. ADUs come with their own set of rules, regulations, and design best practices that a single-family home builder may not be familiar with.

Other than that, meet with all potential builders, and look for one that has:

• Positive customer reviews and a solid track record
• Transparent pricing and clear contracts
• Adequate insurance
• A clear communication style

These qualities will help you avoid hidden costs and keep your ADU project on time and on budget.

ADUs require specialized expertise—partner with a builder who understands local permitting, ADU-specific codes, and long-term property value strategy.

Building Your Dream Granny Flat with Better Place Design Build

At Better Place Design & Build, we specialize in designing and constructing backyard homes, granny flats, and accessory structures that add real value to your single-family home. Whether you’re looking to house extended family or generate additional income, we’re here to help you every step of the way.

Ready to start your own granny flat project? Schedule a free consultation. We’ll walk you through the process—from building plans to move-in day—with honesty and clarity.

The finish stage is where craftsmanship matters most—opt for durable, low-maintenance materials that enhance curb appeal and resale value.