Accessory Dwelling Units

A Good Investment for Portland Homeowners

Owning an ADU in Portland, Oregon.

The city supports them, our government supports them, and Options Financial Residential Mortgage does too. The number of ADUs being built and permitted in Portland, Oregon has skyrocketed since 2010 following the city’s decision to subsidize their construction. The city of Portland will waive $11,000 of developmental fees if you build an ADU between now and July of 2016.  You may be asking yourself, “Is investing in an ADU the right option for me?”  If any time is the right time to invest, it is now.

What is an Accessory Dwelling Unit?

Let’s start with the basics.  An Accessory Dwelling Unit (ADU) is a small, fully functioning separate living unit on the same property as a house.  Known as ‘granny flats’ or ‘mother-in-law apartments’, these small living spaces can provide multiple financial and lifestyle benefits.

Why would I want one?

First, ask yourself:  Why am I researching ADUs?  You might be looking for a long term housing solution for a dependent family member.  It could be you saw a photo of an incredibly small home and were wondering what the deal was.  The fact of the matter is these small living spaces can positively impact your life. We’ll try to cover your ‘why’ in this section.

Let’s start with your family.  An ADU is a great living situation for a grandparent who needs daily care and companionship.  On the other side of the spectrum, an ADU is an affordable housing option for your older child.  With an increase in the number of college students moving back home after graduation, an ADU is a good option for your recent grad who is not yet capable of affording housing on his or her own.  Let your child get a head-start on debt-free living.  When your child is financially capable of buying or renting without building up debt, you can use the space to accrue extra income.

How might you ask? As the owner of an ADU, you have the option to rent out the living space to a tenant. Renting out ADUs has proved to be a great source of extra income for homeowners as well as an affordable solution for low-income renters.

Don’t wish to have relatives or renters on your property?  You can utilize the extra space for your own needs. Use it as a guest home for out of town visitors, or turn it into a home office; work away from the distraction of daily household chores and complete tasks efficiently in a small and focused environment.

The economical designs of ADUs keep developmental costs low.  Rental income can surpass the cost of construction in the long run, leaving you with not only added value to your property, but additional income as well.  Because ADUs are small, they are very energy efficient if insulated and heated properly.

What qualifies as an ADU?

To be considered an ADU, the space must be 800 square feet or 75% the size of its parent house – whichever is less.  If detached from the main property, the dwelling must resemble the look of its parent house in roof pitching, siding and windows, etc. and can reach a maximum height of 18 feet.

Does my converted garage apartment count as an ADU?

Yes!  ADUs can come in many different forms, attached and detached from your main property. They can be created inside of your house by converting an existing living area, finishing an existing basement or attic, or altering the home’s garage space.  As with all new construction, attached or detached, permits are required. There can be limitations based on ceiling heights, property locations and various home specifications.

How Options Financial Residential Mortgage can help. 

Building an ADU will take some financial resources on your part.  This is where we come in.  Investment properties and rental properties are meant to increase your financial well-being, however interest rates are typically higher for these properties.  A cash-out refinance may be beneficial for your ADU; you will have access to immediate money to renovate and bring value to your property.  As a mortgage leader in the greater Portland area, we are familiar with the ADU rules and regulations.  We’ll help you understand your loan options.  Start a conversation with us today about how adding a smaller living space can be largely rewarding.

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