Is $168k for a backyard cottage a deal or a wall?

The 100 amp panel matters. A separate unit usually needs its own service or a subpanel, and if the utility has to upsize the drop to the house that's a line item nobody put in your $27,000. I got a similar allowance quote and the site work landed at almost double once the sewer run turned out to be 90 feet with a slope problem. Ask them point blank what happens to the price if the allowance is exceeded, and get it in writing. Whether you eat the overage or they do is the single biggest number in your post.

Your instinct on sequencing is defensible, and it depends on one assumption: that the feasibility study actually produces a hard site work number rather than a second allowance. Ask what the deliverable is. If it's a soils note, a utility locate, and a zoning check that ends with another range, you paid $2,400 for permission to keep guessing.

On the numbers as written. $168,000 against $1,600 a month gross is about 11.4% of cost per year before anything. Take out vacancy, insurance increase, and whatever your county does to your assessment when a new unit lands, and you're realistically looking at a longer payback than the three to five year figures that get repeated. Those figures usually come from operators in high rent markets who converted existing space instead of building new.

The financing question has one piece worth knowing about. Fannie Mae's policy effective March 2026 lets projected ADU rent count toward qualifying income on an owner-occupied one-unit purchase, capped at 30% of qualifying income. That is about qualifying to buy, not about funding construction on a house you already own, so it doesn't help you here. Confirm current terms in writing with a lender before you plan around any of it.

What I'd want before spending the $2,400: your jurisdiction's setback and maximum size rules, whether owner occupancy is required, and whether the unit can be metered separately. Two of those you can read yourself this week for free. If any of them kills the project, the study was moot.

Pay the $2,400. I've walked away from three deals on cheaper information than that and never regretted paying for a real answer early. What I'd regret is drawing on a HELOC and finding out in month two that the sewer invert is above your slab.

I've been on the crew side, and allowance means the estimator hasn't been to your yard. Access is the thing that eats budgets. If a mini excavator can't get past your house without taking out a fence and a section of driveway, you're paying for hand digging and haul-off. Go stand in your side yard and measure the narrowest point. If it's under eight feet, tell the prefab company that number before they quote again.

Different angle. My market is rural and low price point, and I looked at this twice and passed both times because the appraisers here don't give detached units much credit. So the value-add half of the argument disappeared and I was left with rent only. Your comps at $1,600 suggest you're not in my situation, but do check what a recent sale with a permitted ADU actually closed at before you count on the property value part. Some states don't publish sale prices at all, so you may need an agent to pull it for you.