Build to the zoning maximum or build the smallest ADU that rents

A common ADU decision point: a lot allows a detached unit up to 1,150 square feet, and two bids from the same builder, same site work, same trades, frame the tradeoff clearly. Big version: 1,150 sq ft, two bedroom, one and a half bath, $247k all in including site work, sewer connection, and utility trenching. Comps in a submarket like this might run $2,150 to $2,300 for a detached two bedroom in decent shape. Small version: 620 sq ft, one bedroom, $158k all in, same site work line, same trench, same connection fee. Rent range $1,550 to $1,700. The marginal $89k buys roughly $575 a month at the midpoints, about $6,900 a year gross before anything, maybe $5,400 after the extra insurance, taxes, and maintenance load on a second bathroom. That is roughly 6 percent on marginal cost, thin against a home equity line that can reprice. The case for building big anyway: fixed costs are already spent on the small version, the trench and connection and permit and mobilization don't shrink, and there is no coming back later to add 500 square feet at the same per foot cost. Appraised value contribution and tenant pool both tend to look better at two bedrooms, since families often stay longer than one bedroom churn. The case for small: less capital exposed, faster to build, and a one bedroom that leases in nine days against maybe three weeks for a two bedroom priced at the top of the local range. If rents flatten, the smaller unit is the one still full. The assumption doing all the work is whether the two bedroom actually clears the top of the range or whether that number comes from four listings being read as a market.