2019 ADU Guide – Portland Real Estate

portland adu guide

Thinking about adding an Accessory Dwelling Unit to your Portland home? Shopping for a home or real estate investment where adding an ADU might be feasible? Read on for these answers and more.

ADUs on the Rise in Portland

ADUs — also known as backyard cottages, mother-in-law units, granny flats or, simply, studio apartments — have been around a long time, but they’re gaining in popularity.  According to a recent Citylab article, about 70 percent of Portland is zoned for single-family housing. ADUs are stepping up to fill the gap, “popping up faster here than anywhere else in the U.S., with the city issuing building permits for about one unit per day in 2016.” In 2018, a whopping 660 ADU permits were issued! (And data show that about 85% of these permits will eventually result in an occupied ADU)

Whether it’s to help solve the housing crises, earn a little extra income or house a family member, you may be wondering how to design your ADU. Let’s take a closer look at some of the advantages of owning a home with an ADU in Portland, the types of ADUs you might consider building, and what the code requires for Portland ADUs. 

Portland is ADU Friendly

The great news for Portland home owners and buyers is that the city of Portland is one of the most ADU-friendly in the country. Why? 

  • No System Development Fees. Portland City Council voted to permanently eliminate the usual new-construction fees for Accessory Dwelling Units last year. This cuts $15,000 or more from the cost of adding an ADU in Portland. 
  • ADUs can be attached to the existing dwelling (eg. basement or attic conversion, unit added above the garage, etc.) or built completely detached. 
  • There’s no requirement to create an extra off-street parking space when you add an ADU. Other cities — including all Portland suburbs — do require additional units to come with an additional parking space. 
  • Both the main home and the ADU can be rented out, meaning owners can double the value of their real estate investment property by adding the additional unit. 

Portland ADU Construction Rules: The Basics

Whether the ADU is a conversion of existing space inside a home, or a new construction outside the home, Portland zoning rules limit the number of residents between the two structures. In addition, ADUs must have their own dedicated entrance door, and existing basements or attics must be brought up to current building code. Check out our real estate blog posts on finishing the basement and transforming the attic

Detached units have their own restrictions. The maximum height for a detached ADU is 20 feet, and aesthetically, it must match the existing home. Square foot limitations are 75% of the living area of the existing house, or 800 square feet, whichever is less. 

There are many more codes and rules to follow. Check out the City of Portland ADU Program Guide, which covers both attached and detached ADUs.

Portland ADU Design

Now for the fun part: Designing your ADU. It’s smart to hire an architect to help you with this process — they will be able to maximize the efficiency of the structure and design within the space available. Generally, though, there are some rules to keep in mind. 

  • You’re working in 800 square feet or less, so the key is to include the basics of a home as efficiently as possible. It’s absolutely possible to have 1-2 bedrooms, a full bath, a laundry area and full kitchen in the average-sized Portland ADU. To accomplish this, most units employ the “great room” concept, which, like a studio apartment, combines a kitchen/living/dining area. 
  • For detached ADUs, Portland ADU expert Kol Peterson recommends incorporating high ceilings and high windows to maximize the amount of light coming into the structure. He also recommends facing as many windows as possible to the south, again to catch the rays of the sun. 
  • Consider a loft to stack a sleeping area above the main living area without sacrificing high ceilings. Maximize storage behind the stairs, under the bed, and in alcoves.
  • In Portland, a mudroom comes in very handy during the winter months. A common challenge for those who live in small homes is that they get messy quickly, so having a place near the entrance to remove muddy boots and hang bags and jackets will be much appreciated. 

Reducing the Cost to Build ADUs in Portland

The one major disadvantage to ADUs is the high design and construction cost. The Portland nonprofit Enhabit estimates that they cost from $150,000 to $200,000 per unit. Here are some ideas to bring the budget down. 

  • Use a standardized design. Design costs themselves can incur up to 20% of total construction costs, so using a premade design can help. Enhabit has created the “Essential House”, a 16’ x 24’ (384 sq. ft) fully functional (full kitchen, bath and laundry) one-bedroom structure that they assert can be built for $125,000 or less. Or, check out other small-house building plans available online. 
  • Consider Dweller. This Portland-based startup will front the cost of building a modular ADU in your backyard, rent it out to long-term tenants, and split the revenues with you 70-30. You can buy Dweller out anytime or purchase the unit from the start for $118,000.
  • DIY. Because ADUs are often architecturally simpler than “big houses”, much of the construction can be done by homeowners themselves. Interior finishing, for example, is one aspect of the building that tends to cost more. Just be sure to hire the pros for installation of major systems like plumbing, electrical and HVAC.
  • Make it a short-term rental. When construction is complete, most ADU owners get a higher return on their investment if they put the unit on AirBnb or another short-term rental service. Although there are some up-front licensing costs and tax to pay, the higher premium makes it worthwhile for most homeowners who don’t mind the extra work of turning the rental around quickly.

Ready to purchase your ADU-ready Portland home? Need real estate help? Our top 1% Portland buyer’s agents and seller’s agents are ready to help.

March 4, 2019

Stephen FitzMaurice

Stephen FitzMaurice, Realtor is a top 5% real estate agent in the U.S. A Principal Broker in Oregon, Managing Broker in Washington, he has been licensed since 2003 for residential real estate sales. Call his team in Oregon at 503-714-1111 or in Washington at 360-345-3833.

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