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Are you considering building an accessory dwelling unit (ADU) on your property in Portland? You’re not alone. As of 2021, there have been approximately 3,350 permits issued for ADUs in the Portland area. The number of annual ADU permits in Portland is around 250-300.

So, why have ADUs become so popular over the last decade?

 

Passive Income

One main reason is the investment opportunity an ADU provides.  An ADU rental property is a fantastic way to generate passive income.  Portland is a destination city and Airbnb, Vacasa, and VRBO are heavily favored over hotels by today’s travelers.  You can capitalize on this shift by using your ADU for short-term rentals.    This strategy allows you maximum flexibility and potentially higher income opportunities. 

If you want a more stable passive income that requires less active management, you can use your ADU for long-term rentals.   Portland’s population has grown by more than 14% since 2010, rapidly outpacing the available rental stock.  Additionally, this growth has driven up the purchase price of homes, so people are renting longer while they save to buy.  To help address the affordable housing crisis generated by such rapid growth, the city of Portland offers incentives to ADU owners who commit to using their property for long-term rentals.  These incentives make building an ADU in Portland more affordable.

 

Increased Property Value

Another reason people build ADUs is to increase their property value. Adding additional living space to your property almost always increases the value of your home.  However, an ADU on your property also offers opportunity value.  Buyers looking for passive income or multigenerational living will pay a premium for your property because they can see a return on their investment immediately.

 

Multigenerational Living

The other common motivator behind building an ADU is the increased popularity of multigenerational living.  This lifestyle living arrangement offers a multitude of benefits and is rapidly being embraced by all ages.  ADUs provide flexible solutions to accommodate and facilitate both independence and interdependence.

 

Types of ADUs

After you figure out “why” you’re building, it’s time to figure out which type of ADU is right for you! The three most common  ADU types are (1) attached new construction, (2) detached new construction,  and (3) converted space. A new attached ADU is an addition to your existing home but has a separate entrance and its own kitchen, bathroom, bedroom, and living space.  A new detached ADU  is a stand-alone structure that you build on your property away from your main house.  If you don’t want to build new, an ADU can often be created by converting a basement, attic, or garage. 

 

The Right ADU for You

The best ADU for you depends on your goals.  If your primary goal is increased property value, we recommend building new space rather than converting existing space. If you give up your garage to create an ADU, the increased property value from the ADU is offset by the decrease in value that results from no longer having a garage for the main house.  By adding new space, you bolster your value rather than just trading one valuable space for another.

On the other hand, if the main objective is to create a multi-generational housing situation, converting the basement or attic might provide the perfect balance of togetherness and personal space.  If you plan to use your ADU as an investment, you’ll want to create a sense of separateness that protects your own privacy as well as that of your renter. 

 

Getting Started

There are many reasons why Portland residents are building ADUs on their properties. If you’re considering building a custom ADU and would like to talk to an expert to learn more about your options, give T.H.E. Remodel Group a call. We would be more than happy to meet with you.  Together, we will discuss your goals for the ADU and figure out the best approach and how to get started.