The Portland rental market is booming. Portland publications raised alarms when the average Portland rental cost hit $1400 last summer. These days, average monthly rent for a 1 bedroom in the city exceeds $1500. Even as new apartment complexes open, demand for rental housing continues to grow on pace, so we can expect the Portland rental market to remain tight. A headache for renters, perhaps, but this scarcity of apartments is a great opportunity for home buyers looking to foray into property management.
One investment option is to build an additional home on an existing property. Accessory Dwelling Units, or ADUs, are complete living spaces under 800 square feet and less than 75% the size of the main home which can be built on residential lots alongside an existing home. ADUs are rising in popularity in the Portland area as homeowners see the benefits of building and renting out small homes in their backyards. The City of Portland is encouraging the trend by waiving Service Development Charges for ADUs, a $10,000 savings. Accessory Dwellings makes a calculator to help you see how adding an ADU can be a great investment.
Creating an ADU is a major construction project which comes with a sizable cost. Converting your basement into an ADU will run around $45,000, while a new detached structure may cost closer to $100,000. For home buyers, financing an ADU in a package with your home mortgage can make good sense. With Umpqua Bank’s All-In-One custom construction loan, for example, when you buy a home with ADU potential you can include the cost of construction or renovations in your mortgage, borrowing off the total value of the existing home and completed ADU. One loan, one monthly payment, one competitive rate, one new income source.
LOOKING FOR PROPERTY FOR AN ADU?
The Portland Home Team will be happy to answer questions, recommend neighborhoods and properties and ensure you find the home that meets your needs!
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