ADUs in Portland: Unlocking the Potential in Your Own Backyard
If you’ve lived in Portland for a while, you’ve probably noticed more and more homeowners adding small backyard homes, basement apartments, or garage conversions — and for good reason. Accessory Dwelling Units, or ADUs, have become one of the most flexible and valuable ways to make the most of your property.
Whether you’re looking to generate rental income, create space for family, or boost your home’s resale value, an ADU can be a smart move — when done right.
One of my specialties is helping clients evaluate ADU opportunities, from backyard cottages in Cully to basement conversions in Mt. Tabor. Here’s what you should know if you’re thinking about building or buying a home with an ADU.
What Exactly Is an ADU?
An ADU (Accessory Dwelling Unit) is a smaller, independent home located on the same property as a primary residence.
It can take many forms:
A detached structure — like a backyard cottage or “tiny home.”
An attached addition — built onto the main home or over a garage.
A conversion — turning an existing basement or garage into a livable unit.
Each has its own benefits depending on your lot, budget, and goals.
Why Portland Loves ADUs
Portland has been a leader in encouraging ADU development. City zoning rules have evolved to make them easier to build, and many homeowners are seeing real benefits:
Rental income: Long-term rentals can provide steady monthly revenue.
Multigenerational living: ADUs make it easier for family to live nearby, while maintaining privacy.
Property value growth: A legal, well-built ADU often increases resale value.
Flexibility: You can rent it out, host guests, or use it as an office or studio space.
Sustainability: ADUs use less land and materials than new single-family homes, supporting Portland’s climate goals.
Permits, Rules, and Local Incentives
Building an ADU in Portland means understanding the city’s requirements — but it’s manageable with the right plan.
Most residential zones allow one or two ADUs per lot, depending on your property size and layout.
The ADU must be under 800 square feet (or 75% of your main home’s size, whichever is less).
You’ll need to apply for a building permit with the City of Portland, which includes detailed site and structural plans.
Portland currently offers a System Development Charge (SDC) waiver, which can save homeowners tens of thousands in fees — but it comes with a 10-year restriction on using the ADU (or main house) as a short-term rental (like Airbnb).
Pro tip: If you’re buying a home with an existing ADU, ask your agent (hi 👋) to check if it was built with the SDC waiver or has any rental restrictions tied to it.
What Does It Cost to Build an ADU?
Costs depend on your property and design, but here’s a general range for Portland:
Garage or basement conversion: $100,000–$180,000
Detached new build: $200,000–$350,000+
While that’s a significant investment, the potential for long-term rental income or increased property value often makes it worth it. Many homeowners are able to cover their construction loans through ADU rental income within a few years.
How an ADU Impacts Real Estate Value
A well-designed, permitted ADU adds real value to your property — not just financially, but in flexibility and appeal to future buyers.
When representing buyers, I always help them look closely at:
Permit history (to confirm the ADU is legal and insurable)
Design and privacy (separate entrances, soundproofing, access)
Utility setup (shared or separate meters)
Rental potential (based on neighborhood demand)
For sellers, an ADU can make your home stand out — especially in neighborhoods where extra space or income potential is hard to find.
Challenges to Keep in Mind
ADUs are exciting, but they’re not without hurdles. Be prepared for:
Permitting delays if your lot is small or in a conservation zone
Added property taxes and insurance once the ADU is complete
Construction access issues on tight lots
Upfront costs that require financing or careful planning
The good news? With the right team — a solid builder, a knowledgeable agent, and a clear plan — these challenges are completely manageable.
FAQ: ADUs in Portland, Oregon
Q1: Can I build more than one ADU on my property?
In many cases, yes. Portland now allows up to two ADUs on a residential lot, depending on size and zoning.
Q2: Can I Airbnb my ADU?
If you used the SDC waiver to save on fees, no — short-term rentals aren’t allowed for 10 years.
If you didn’t use the waiver, you can apply for a short-term rental permit, but there are still city restrictions to follow.
Q3: How long does it take to build an ADU?
From design through final inspection, expect about 6 to 12 months, depending on your builder and permit review times.
Q4: What’s the ROI on an ADU?
Rental income in Portland can range from $1,200–$2,500/month depending on location and size.
Detached ADUs in walkable neighborhoods tend to perform best, but even basement conversions can add great value.
Q5: Do ADUs make sense for every property?
Not always — slopes, setbacks, tree protection zones, and lot access can all affect feasibility. I always recommend an early site assessment before committing to plans or budgets.
Q6: What if the ADU was built without permits?
You’ll likely need to “legalize” it through the city, which can involve inspections and upgrades. Always confirm permit history before purchasing a property with an existing ADU.
Final Thoughts
As Portland continues to grow, ADUs are one of the smartest ways homeowners can add value, flexibility, and future-proof their properties. Whether you’re thinking about building one, buying a home with one, or selling a property that already has one, I can help you navigate the process from both the real estate and investment sides.
If you’d like to explore whether an ADU makes sense for your property — or you want to see homes with existing ADUs — reach out anytime.
📞 Carson Mead
Together Realty | Portland, OR
✉️ carson@wearetogetherrealty.com