The Short Answer
Converting an older economy motel into apartments usually costs somewhere between about $35,000 and $150,000 per finished unit in construction, on top of what you pay for the property. That range is wide on purpose. A building that already has sprinklers and decent wiring sits at the low end. A 1970s motel that needs a fire line, a new electrical service, new drains, and rebuilt walkways sits at the high end.
For context, California's Project Homekey averaged roughly $130,000 to $148,000 per unit all in, including acquisition, against roughly $380,000 to $570,000 for new affordable construction. One operator of market-rate conversions has described renovation budgets of about $35,000 to $45,000 per unit on lighter-scope buildings. Your number will land between those depending on what the building needs.
A Sample Budget: 40-Room Exterior-Corridor Motel
Here is a realistic budget for a two-story, 40-room motel converted into 40 studios. Figures are construction and soft costs only, not purchase price.
Per-unit costs (multiply by 40)
- Studio kitchen package (cabinets, counter, sink, cooktop or range, fridge, hood): about $7,500
- Bathroom refresh (fixtures, reglazing or tile, ducted exhaust fan): about $5,500
- Flooring, paint, doors, and lighting: about $6,000
- Heat pump or ductless mini-split: about $4,200
That is roughly $23,200 per unit, or about $930,000 for 40 units.
Building-wide costs
- Electrical service upgrade, meters, and unit subpanels: about $320,000
- Fire sprinkler system, riser, and backflow preventer: about $260,000
- Plumbing repairs and kitchen rough-in: about $210,000
- Architecture, engineering, and code consulting: about $180,000
- Insulated windows and entry doors: about $160,000
- Walkway, stair, and guardrail rebuild: about $140,000
- Laundry, leasing office, and community room: about $110,000
- Fire and sound separation between units: about $95,000
- Asbestos and lead abatement: about $90,000
- Accessible units, routes, and parking: about $85,000
- Fire alarm and smoke and CO detection: about $70,000
- Condition, environmental, and hazmat surveys: about $18,000
Building-wide items total about $1.74 million. Add the unit costs and you are near $2.67 million, or about $67,000 per unit, before optional work.
The Optional Items That Usually Are Not Optional
Two items are often left off early budgets and then show up anyway. A roof with less than about ten years of life left should be replaced before new interiors go in, roughly $190,000 on this building. Site work, including the parking lot, lighting, landscaping, signage, and filling or repairing the pool, runs about $150,000. Add both and the total climbs to about $3 million, or $75,000 per unit.
Then add permits, utility fees, and impact fees, which can run $100,000 or more, and a contingency of at least 15 percent. A realistic all-in construction figure for this building is around $85,000 to $90,000 per unit.
The Three Line Items That Swing Your Budget
Fire sprinklers. Low-rise apartment buildings can usually use an NFPA 13R system, which is cheaper than a full commercial system. Retrofit pricing often runs roughly $2 to $7 per square foot for the piping alone, but the real swing is the water supply. If the street main cannot deliver enough flow, you may need a larger fire line or even a fire pump. Get a hydrant flow test before you close.
Electrical. Each studio needs cooking, refrigeration, kitchen countertop circuits, and heating and cooling. That usually means a new panel in each unit and a much larger building service. Individual metering adds meter banks and months of utility coordination.
Plumbing. Cast iron or galvanized drains from the 1960s and 1970s are often at the end of their life. Camera-scope the lines during due diligence. Replacing them under a slab is one of the most expensive surprises in these projects.
Combining Rooms: Fewer Units, Better Rent
Joining two rooms into a one-bedroom cuts your unit count but raises rent per unit, and the second bathroom becomes a laundry closet or storage. It also adds a structural opening in the shared wall and new fire separation around the combined unit. Many projects do a mix, keeping most rooms as studios and combining a handful. Price both layouts before you decide.
How Owners Pay for It
Market-rate conversions typically use a bank or private bridge loan for 60 to 75 percent of the cost, with equity covering the rest. Affordable and supportive projects often stack low-income housing tax credits, state or city housing funds, and sometimes federal dollars, which come with rent limits and compliance reporting for years. Some cities waive or reduce impact fees for conversions, so ask early.
How It Compares
Even at $90,000 per unit plus acquisition, a motel conversion usually beats building new by a wide margin, and it beats most office conversions too. Our comparison of motel, office, and retail conversions walks through why. For other project types, see the complete conversion price guide.
Related Reading
- Motel to Apartments: Why Old Motels Are 2026's Fastest Housing Fix
- Motel Conversion Permits: Zoning, Change of Occupancy, and Sprinklers
- How to Design a 300-Square-Foot Studio That Works
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