Main residence and a guest home side-by-side

For several years, researchers who chronicle the trends in home construction and home improvement have noticed an increased interest in homeowners wanting additional, functional and private spaces to augment their main dwelling. These additions have been called colorful names such as “granny flats” or “backyard cottages,” legally appropriate descriptions such as “accessory dwelling units” (ADUs), and the most popular moniker, guest houses.

Whether they are built to accommodate growing families, multigenerational households, homeowners wanting to realize additional rental income from networks such as Airbnb™ or Vrbo™ or having living space for domestic employees, guest houses are very popular. However, when it comes to building one, the challenges can be significant and expensive. 

Is a guest house in your future? Planning is the most critical stage of the building process. Ask your builder or architect to consider the innovative construction and home improvement products from Acme. Click here for more information.

Considerations Before Building

Even though this structure is “just” a guest house, it’s still a HOUSE, and that means it's more complicated than just throwing up some walls and windows. According to this overview, “Before you embark on building a guest house, you need to find out what’s legal and what’s not legal in your municipality, because different rules on guest houses exist depending on where you are. You should also make sure you aren’t living in a subdivision where the homeowners association doesn’t allow guest houses.”

Rest assured, there will be permits - lots of permits - and strict adherence to construction regulations, which undoubtedly will vary from city to city and perhaps neighborhood to neighborhood. Hiring qualified architects and building contractors will help a homeowner navigate this labyrinth. 

This guest house construction overview also notes, “You also must consider if your guest house might block your favorite view. You need to visualize how the addition of a new structure in your backyard is going to impact your surroundings. Obviously, there is a cost associated with building a guest house, which is why you need to investigate financing ahead of time, so you have more options in what goes into your guest house, as well as its size.”

Types of Guest Houses

Just like families, guest houses come in many sizes and styles. The home design experts at House Beautiful Magazine note that a custom-built guest home is the best long-term option. 

“Building a guest house from scratch is the most customizable option, but it’s going to be the most expensive and time-consuming as well. On a cost per square foot basis, building a small guest house is no cheaper than building an entirely new house.”

Several sources note that the national average to build an on-site home is $100 to $200 per square foot. A smaller structure, while less expensive, will typically yield a lower ROI. Most experts would recommend building a guest house that’s the largest allowable square footage for an ADU, or at least 500-square-feet, to get the most bang for your buck.

The editors at House Beautiful add, “Construction of a guest house can take anywhere from four months to a year, with weather and site conditions being crucial to how quickly building can happen. Keep in mind that this is just the timeframe for construction — design, permitting, and bidding for contractors adds at six to 10 months.”

A custom-built guest house also allows the homeowner more flexibility in construction materials that will complement the main residence. For example, if the main dwelling is brick, the guest house can also be constructed of this low-maintenance building material or the very popular thin brick, which is less expensive than traditional brick and takes less time (and money) to install.

If the main residence has a more modern design, many architects suggest a more contemporary siding for the guest house. Cladding products such as MAC Metal Architectural siding is a perfect look for this style.

Small brick guest house overlooking a pond

Another approach to building a guest house is to convert an existing structure.
House Beautiful notes, “Transforming a garage or shed into a guest suite can be a budget-friendly option. According to HomeAdvisor, costs range from $6,000 to $21,000, with the national average for this type of project falling around $13,075. Structural changes like adding windows, insulation, drywall, a ceiling, and flooring make up the bulk of the costs here (in addition to labor), but if you want to make a full-on apartment with a bathroom and a kitchen, expect to spend significantly more.

Buying a ready-made, modular guest house is the least expensive option. However, this option is not without challenges. According to, “Our cost and price estimates for an ADU from PrefabADU range from $345 - $405+ per square foot. These estimates are all inclusive, meaning that the cost of the home components, interior finishes, labor and site work are included.”

House Beautiful editors point to a few landmines to watch out for:

“First, you need to adequately prepare the site where you plan to install your structure. This entails leveling and grading the land and installing a foundation. While a small garden shed can sit on an on-grade foundation of concrete blocks and lumber, anything larger than 160 square feet needs a stronger foundation to avoid it sinking into the ground. This would be either a concrete slab (average starting cost is $4 per square foot) or a pier and beam foundation (average $5 per square foot). HomeGuide puts the average cost for a concrete foundation of this size at $3,846.”

This modular option also must be insulated, which can add another $600 to $800 to the cost of the guest house.

Pros and Cons of Adding a Guest House

Every home improvement project has positive and negative aspects. The most obvious advantage of adding a guest house is an increase in the usable square footage of the entire residence. This can be used in any way, for any purpose, and will add value to the property when it is sold. Of course, there’s a downside. This additional space will cost money and cause disruption while construction is underway.

The Advantages of Adding a Guest House

According to this article, typical guest houses range in size from 600 to 1,500 square feet, and have the following advantages.

  • Additional living space 

    Whether you’re using it for rental income, a place for the in-laws to stay or for entertainment for the family, additional living space is a massive benefit to having a guest house built on your property.
  • Comfort of private space, which allows guests to feel at home
  • Privacy and safety to escape for a relaxing moment
  • Comfortable multi-generational living
  • Additional income using this space as a rental
  • Useful place for home staff

    Including housing in your benefits package for home staffing is a great way to attract top candidates for the job. 
  • Higher value of your property
  • Hardscaping and landscaping upgrades

    Tying in hardscaping and landscaping to your guest house project is not a bad idea. While the guest house is the focus of the project, it’s also a great time to address landscaping issues that you’ve been wanting to tackle, or hardscaping projects.

    This can include adding pavers, synthetic turf and upgrading outdoor entertainment spaces, which can be shared with the guests.

The Disadvantages

The primary challenges of building a guest house come down to two primary factors: time and money. The overview article notes the following disadvantages of constructing a guest house.

  • It takes careful planning

Building a guest house begins with an idea in your head but must be fleshed out with a professional. There are permits to be pulled and decisions to be made.

  • It can be costly

You’re basically building a small home, and nobody should expect that to come at bargain prices. Cost is often the reason these projects don’t pan out.

  • It takes work

Building a guest house can disrupt your daily life, especially if construction takes place in highly traveled areas that bar entry to your home. 

Improving Not Moving

The COVID pandemic forever changed the perception of the value of a home. Plus, for many reasons, families are staying in their homes for longer than any time in the past few generations. As a result, when more space is needed or improvements need to be made, they are “improving rather than moving.” The popularity of adding a guest house is another aspect of that trend.

When you’re ready to make some home improvements, remember Acme is much more than just brick. Click here to see brochures from the many, top-of-the-line products that make a home, or guest house, special.