If you build it, renters will come
Yesterday I went to a brokers class presented by Alan Armstrong from Outpost PDX on Accessory Dwelling Units (backyard cottages, mother-in-law suites, etc…) in the Portland area. I learned some new info from Alan about ADUs and other types of outbuildings so I figure it is time for a follow up on my first post about ADUs in Portland.
The rental element of building and ADU is what makes these projects quite intriguing from an income standpoint. If you are in an area with high rental demand an ADU could pay itself off in a very short period of time. Say you are in a market where new, clean 2 bedrooms are renting for $1000. To build a 2 bd. ADU, say the OP7 by Outpost (pg. 12), you’ll be looking at $60-90k based on the SDC fees being waived and depending on quality and finishing work. Now imagine trying to find a new construction, 2 bd. rental home in that same market for $60-90k. Trust me as someone who previews 25+ homes per week, it is not going to happen and if it does, “new and “clean” are going to be the last words to describe the place.
The three general types of accessory buildings people construct in their yards outside of garages are storage units such as a garden shed, “living space” such as an art studio, media room etc… and accessory dwelling units which must contain a sleeping space, kitchen and bathroom. “Living spaces” and garden sheds require less restrictions and permitting, I am going to stick with ADU guidelines for this post.
Key rules and restriction to know about ADUs and other outbuildings in PDX:
-SDCs (System Development Charges paid to the city when getting permits) that can run from $7500 – $15,000 are waived for projects permitted before June 30th 2013.
- ADU can be up to 75% of the sq. footage of the primary residence but cannot exceed 800 sq. ft.
- Total detached building lot coverage cannot exceed 15% of lot sq. footage – this includes ADUs, “Living Units”, Garages, Shops, Storage units, etc…
- ADU height must be 18 ft. or under.
- ADU setbacks- It must be at least 6 ft. from the existing house, 5 feet from the sides of the lot, 5 feet from the back and 60 ft. from the front.
- The design of the ADU must match that of the existing home in terms of architectural style, trim, color, roof pitch, etc… Note: “Living Units” that are not used as a home such as art studios and media rooms do not have to comply with design standards.
- There is no additional parking required to add an ADU unless existing parking is lost to the ADU.
-ADUs can only be built where there is a single family residence and cannot be built on the property of a duplex or multifamily.
Note: all of these rules listed apply to the City of Portland, many of the surrounding suburbs have similar rules, but it is always best to check with them before starting a project.
Aside from everything listed above there are also restrictions in regards to the utilities and fire and safety regulations. Alan is a better person to talk to than me about these things though, he can be reached at email@example.com. He is a great person to ask questions about ADUs and can come out to your property for a site assessment.
If you are curious about homes that already have an ADU or are looking for a property where an ADU could be added let me know, I am previewing all the time and would love to help you find a great home.
Here is the city of Portland’s official guidelines and overview of ADUs.