ADU Construction Services in the Bay Area
Custom Accessory Dwelling Units in Gilroy, Saratoga, Morgan Hill & Surrounding Communities
There’s a good chance your home already has the space for a second living unit you just haven’t thought of it that way yet. That spare bedroom your kids moved out of five years ago. The attached garage where you park a lawnmower and forget about the rest. The ground-floor section of the house that nobody really uses anymore.
At SGM Builders, we turn those forgotten spaces into beautiful, code-compliant Junior Accessory Dwelling Units for homeowners across the South Bay and South County. We’ve helped families in Gilroy, Saratoga, Morgan Hill, Los Gatos, Los Altos, and Hollister unlock real value from square footage they were already paying taxes on and we handle every single detail, from the initial design concept to the final city inspection.
A JADU is one of the fastest, most affordable ways to add livable space to your property. And unlike a full ADU, you don’t need a big backyard or a massive budget to make it happen. You just need a home with a little room to spare and a builder who knows how to make the most of it.
That’s us.
What Exactly Is a JADU and Why Are South Bay Homeowners Paying Attention?
A Junior Accessory Dwelling Unit is a small, self-contained living space no larger than 500 square feet that’s carved out of your existing home. It doesn’t sit in the backyard like a detached ADU. It doesn’t require a new foundation. Instead, it repurposes space that’s already part of your house a bedroom, a portion of a large floor plan, or an attached garage and transforms it into an independent unit with its own entrance and a small efficiency kitchen.
One of the things that makes JADUs unique is that they’re allowed to share a bathroom with the main residence. For a lot of families, that’s not a compromise it’s actually a practical advantage that keeps costs down and makes construction significantly simpler.
California has been pushing hard to create more housing, and JADUs are a direct result of that effort. The state has streamlined the approval process, reduced fees, and given homeowners more flexibility than ever before. For people living in communities like ours where housing costs are high and demand is relentless a JADU is one of the smartest moves you can make with the space you already own.
Here’s what makes this especially relevant if you live in our service area.
In Gilroy and Morgan Hill, many homes were built with generous floor plans and attached garages that are perfect JADU candidates. The lots are larger, the home footprints tend to be more spacious, and the cost of conversion is lower than in the more expensive parts of the Bay Area. We’ve worked with homeowners in both cities who were shocked at how little it cost to turn an unused bedroom and a section of hallway into a fully permitted living unit.
In Hollister, the opportunity is even more compelling. Construction costs in San Benito County are generally lower, but rental demand has been growing steadily as more workers commute into Santa Clara County. A JADU in Hollister is one of the highest-return, lowest-risk housing investments a homeowner can make right now.
Homeowners in Los Altos Hills and Saratoga tend to approach JADUs a little differently. The homes in these communities are larger, the properties are more established, and the motivations are often less about rental income and more about family. We’ve built JADUs in Los Altos Hills for aging parents who wanted a private space on the same property, complete with their own entrance and a small kitchen for morning coffee. In Saratoga, we’ve seen families create elegant in-law suites that blend seamlessly with the rest of the home spaces that feel intentional, not improvised.
And in Los Gatos, the diversity of housing stock means the possibilities are wide open. Whether it’s a ranch-style home with an oversized attached garage or a two-story house with an underutilized ground floor, we’ve found creative solutions for homeowners across the town. Los Gatos families are particularly drawn to JADUs because they offer a way to keep adult children close while they save up in one of the most expensive housing markets in the country.
Whatever your reason rental income, family housing, a private guest suite, or simply making smarter use of your space a JADU gets it done faster and for less money than almost any other construction project.
Types of ADUs We Design and Build
There's no one-size-fits-all approach to building an ADU. The right solution depends on your lot, your home, your city's zoning code, and what you want the space to do for you. Here's a closer look at the options.
Detached ADU Construction
The biggest advantage of a detached unit is privacy. Whether you're renting it to a tenant or housing a family member, both parties get genuine separation. There's no shared walls, no shared hallways, no feeling like you're living on top of each other. The tenant or occupant has a completely independent living experience, and you keep your main home exactly the way it is. Detached ADUs can range from efficient studios around 400 square feet all the way up to spacious two-bedroom units at 1,200 square feet, depending on your city's regulations and your lot's setback requirements. We handle everything foundation, framing, roofing, plumbing, electrical, HVAC, insulation, finishes, and landscaping around the new structure.
Attached ADU Construction
This option works especially well on properties in Los Gatos and Saratoga, where lot configurations sometimes don't leave enough room for a fully detached structure but the home itself has potential to expand. We've built attached ADUs by extending off the back of a house, converting a ground-floor section beneath a raised home, or adding a second story with a separate exterior staircase.
Junior ADU (JADU) Construction Garage-to-ADU Conversion
We do a lot of garage conversions for homeowners across all six of our service cities. The reason is simple: you save significantly on construction costs because the basic structure already exists. We handle structural reinforcement if needed, insulation, new windows and doors, plumbing and electrical rough-in, drywall, flooring, kitchen and bathroom installation, and all the finishing touches. One thing to be aware of: some cities require you to replace the lost parking space, usually with an additional driveway pad or carport. We'll walk you through your city's specific requirements during the consultation so there are no surprises.
Junior ADU (JADU) Construction
A JADU is a compact unit — 500 square feet or less — created within the footprint of your existing home. It's the smallest and most affordable type of ADU, and California has made them remarkably easy to permit. JADUs are popular with homeowners who want to convert a spare bedroom or a section of their home into a semi-independent living space. They include an efficiency kitchen and a separate entrance, and they're allowed to share a bathroom with the main home. For families dealing with an aging parent who needs nearby support or an adult child who needs a transitional space, a JADU is often the perfect fit.
The Real Benefits of Building an ADU on Your Property
People build ADUs for all kinds of reasons. But after hundreds of projects, these are the benefits our clients talk about most.
A Meaningful Increase in Property Value
A permitted, well-constructed ADU doesn’t just generate income it adds real value to your home. Appraisers take into account the additional livable square footage, the income potential, and the overall versatility of the property. In a market like the South Bay, where every square foot counts, that additional value can be substantial.
And here’s something a lot of homeowners don’t think about: even if you never rent the ADU, its existence makes your property more attractive to future buyers. Homes with ADUs tend to spend less time on the market because they appeal to a wider range of buyers from investors to multi-generational families.
Housing for the People Who Matter Most
There’s a reason people started calling these “granny flats.” For decades, families have used secondary units to keep aging parents close close enough to help with daily needs, far enough to preserve everyone’s dignity and independence.
In our experience, multi-generational living is the second most common reason homeowners in Morgan Hill, Gilroy, and Los Gatos build ADUs. A parent who might otherwise need an assisted living facility can live just steps from their family. An adult child who’s saving for a down payment gets a real home without paying Bay Area rent to a stranger. A visiting relative has a comfortable, private space instead of sleeping on the couch.
A Private, Professional Workspace
Remote work has changed the way a lot of people think about their homes especially in communities like Los Altos Hills and Saratoga, where many residents work in tech, finance, or consulting. A spare bedroom with a desk in the corner doesn’t cut it when you’re on video calls eight hours a day and need genuine separation between work and family life.
An ADU designed as a home office gives you a real door to close at the end of the day. Quiet. Professional. Yours. Some of our clients have even built ADUs with dedicated meeting rooms, soundproofing, and high-speed wiring for a true professional workspace.
Boost Your Property's Market Value
An ADU is one of the very few home improvements that pays you back literally. Unlike a kitchen remodel or a landscaping project, an ADU generates income from the month it’s occupied. It’s an asset that works for you every single day, and its value typically grows right alongside the property market.
For homeowners approaching retirement, that monthly rental check can be the difference between financial stress and financial peace of mind.
Why Homeowners Across the South Bay and South County Trust SGM Builders
If you’ve been thinking about building an ADU on your property, you’re probably weighing a lot of questions. How much will it cost? Will the city even approve it? How long is this going to take? And maybe the biggest one is it actually worth it?
We get it. At SGM Builders, we’ve sat across the kitchen table from homeowners in Gilroy, Saratoga, Morgan Hill, Los Gatos, Hollister, and Los Altos Hills who had those exact same questions. And after walking them through the process and handing them the keys to a finished unit every single one of them said the same thing: they wished they’d done it sooner.
We’re a licensed, locally operated construction company that specializes in accessory dwelling units from the ground up. That means we don’t hand you off to a designer, then a permit expediter, then a framing crew, then a plumber. We manage the entire project under one roof your point of contact stays the same from the day we shake hands to the day you walk through your brand-new ADU.
Frequently Asked Questions About Building an ADU
How much does an ADU cost to build in the South Bay and South County?
It depends on the type, size, and finishes you choose. As a general range, our projects typically fall between $175 and $375 per square foot. A garage conversion on the lower end, a fully detached custom build on the higher end. During your free consultation, we’ll provide a detailed estimate tailored to your specific project no vague ballpark, but real numbers you can plan around.
How long does the process take from start to finish?
Most ADU projects take between 5 and 10 months total that includes design, permitting, and construction. Permit turnaround varies by city: Morgan Hill and Gilroy tend to process quickly, while some jurisdictions take longer. Garage conversions are the fastest builds, sometimes finished in as little as 10 to 14 weeks once permits are approved.
Do I need a permit?
Yes, always. There are no exceptions. Every ADU whether it’s a detached new build or a simple garage conversion requires city-issued building permits. The good news is that California has passed legislation that makes the process faster and more predictable than it used to be. We handle all of it for you.
Will building an ADU increase my property taxes?
It will, because you’re adding assessable square footage to your property. However, your existing home is not reassessed only the new construction is taxed at current rates. For most homeowners, the additional tax is modest compared to the rental income or value the ADU generates. We always recommend consulting with a tax professional for numbers specific to your situation.
Can I rent out my ADU?
Yes. Long-term rentals are permitted in virtually every city we serve. Short-term rentals (like Airbnb) may have restrictions depending on local ordinances. We’ll clarify the rental rules for your specific city during our initial consultation.
Can I build an ADU if I already have a JADU?
Yes. California law allows one JADU and one ADU on a single-family lot. Some of our clients take advantage of this by building both — one inside the home and one in the backyard — to maximize rental income and property value.
What if my lot is on a hillside or has unusual terrain?
We work on properties with all kinds of topography, especially in areas like Los Altos Hills, Saratoga, and parts of Los Gatos where hillside lots are common. Challenging terrain adds complexity, but it doesn’t make an ADU impossible. We bring in the right engineering and design solutions to make it work safely and beautifully.
Do I need to provide parking for the ADU?
In many cases, no. California law has eliminated parking requirements for ADUs located within half a mile of public transit or in certain designated areas. Even where parking is required, it’s typically just one additional space, which can often be accommodated with a driveway pad. We verify parking requirements for your specific property during the design phase
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