Portland ADU, Additional Dwelling Unit Guide 2021

Accessory Dwelling Units, or ADUs, are a popular form of housing in Portland. They can be created in a variety of spaces, from a converted garage or basement to a new structure in the backyard. For some homeowners, they’re the secret to home affordability in the metro area, while for others, they create a vital space for a family member or aging in place.

Whatever the case, the good news is that ADUs are now allowed in every city in Oregon. In this article, we’ll dive into the types of ADUs we typically see in and around the Portland metro area, how you can use them, and what the regulations are for the different cities and counties that make up the Portland metro area.

Portland ADU 101: Types of ADUs, Costs and Restrictions

An ADU is defined as a stand-alone housing unit with kitchen, bath, and sleeping areas. ADUs have their own entrance (not through the main house) and separate plumbing, electrical and HVAC systems.

As an “accessory” dwelling unit, the key limitation on developing an ADU is that it must be built on a lot with an existing detached single-family home (in Portland proper ADUs can now be added to a lot with a duplex). There are two main types of ADUs: Detached or Attached. A detached ADU is built somewhere else on the lot, usually in the backyard. Attached ADUs are built on to the existing home, in any of the following locations:

Attic
Basement
Above the garage
Attached somewhere else on an existing home

How much does it cost to build a Portland ADU? The best answer is that it varies – a lot. There are permitting and development costs, and then there are the actual construction costs. In most areas of the Portland metro region, the city or county will charge for a building permit as well as a systems development fee (which pays for sewers, streets, etc.). Development costs also include paying the architect or designer, surveyor, and structural engineer, but not all projects will require these professional services.

Construction costs are primarily dependent on the type of ADU. Conversions of an existing space (basement, attic) are least expensive. Detached units and add-on units over the garage are the most expensive. To determine if the cost will be on the high or low side, ask yourself if there is already electrical and plumbing available – enough to add a new kitchen and bathroom.

For a standard backyard ADU, construction costs are usually estimated at around $150,000. In a 2018 Portland State University survey, 43% of homeowners said they paid less than $100,000 for an ADU. Many of these were interior ADUS. Significant savings can result from the homeowner doing some or all of the construction.

To pay for constructing an ADU, most homeowners in the survey tapped into savings or took out a home equity line of credit. Most calculated that the unit would take between 6 and 10 years to pay off, whether as a short-term or long-term rental.

ADUs for Short and Long-Term Rentals

Any way you slice it, an ADU is an opportunity to bring in “passive” income. You can rent the unit out short-term, have a long-term tenant, or live in it yourself and rent out the main home.

Most people think of short-term rentals as the real moneymakers. Portland short-term rentals generate an average income of $1,748/month. However, there are drawbacks to providing short-term rentals, and Portland offers a financial incentive to ADUs built as long-term rentals (see next section). And while there’s a perception that being a landlord is difficult, it’s probably on-par with managing a short-term rental, and will require much less of your time. Check out our full article on Portland rental laws and resources, which covers both short- and long-term rental options.

Easiest city to build an ADU in the Portland Metro Area

What’s the city with the most flexible zoning regulations and fee waivers to make it easy to build an ADU? It’s the city with the biggest need for housing infill — Portland. With new regulations that will go into effect in 2021, there can be up to two ADUs on a city lot (built in any approved configuration), and off-street parking for the additional unit is not longer required. No other city in the country that we know of has removed these potential barriers to ADU development. In addition, Portland will waive system development fees (which can add thousands of dollars to the project) if the ADU is used as a long-term, not short-term rental for at least 10 years.

To learn more, check out the ADU Program Guide by City of Portland Bureau of Development Services.

ADU Codes and Zoning Regulations in the Portland Metro Area

Since ADUs started taking off 10-15 years ago, many municipalities and counties in the greater Portland area have developed their own codes regulating their construction. ADUs may not be allowed in all residential zones, so it’s good to check before you get too far into the planning process. Here are some relevant links for the Portland metro area:

Where to start?

1. Review the codes and zoning regulations for your area.

2. If you have a general idea of where you want your ADU to go, draw up some basic plans on graph paper. It doesn’t need to be fancy, just show the dimensions. Also figure out where the water and sewer line connections are to your house.

3. Contact your local planning/development office, whether it’s for your city or county if you live in an unincorporated area. They can help you determine if your plan is feasible, answer your questions about the code, and give you an idea of what the permitting and system development fees will be.

4. Obtain the building permit, as well as electrical, plumbing and mechanical permits (as needed for your project). Alternatively, you can seek out a contractor who will handle the permitting process for you. Be sure to check their CCB License online and ask for references.

5. In 2020, expect some continuing delays in dealing with the government to get any plans approved. They are working hard to catch up, but there is a backlog right now in most metro areas in Oregon.

Looking for an ADU-ready home?

If living in a home with an ADU is part of your Portland dream, let us help you find it! Our top 1% buyers’ team is always available to answer your questions.