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Fundamentally, I was seeking a residential living situation that would pay for itself. To me, dwelling in America cost too much. I sought a less expensive way to live in a nice space in an urban area (Portland). I wanted to find a living model that would not drain my financial resources. At first, I considered a range of options, from tiny houses, to renting out a house boat, to retrofitting a bus or airstream. After much creative brainstorming, I realized that ADUs represented a living model that could actually be profitable.
Since I lived in a city that permitted ADUs, I sought a property that would be well suited to building an ADU and whose main house pay for itself through rental income, once I moved into the ADU. The process of selecting the right property took a couple months, but after visiting 60 houses in NE Portland, I found the property that met my criteria and purchased it. With an FHA loan, I put down only 3.5% of the value of the house (~$10K), and this left me with enough disposable cash to build an ADU.
The ADU that I started in April of 2011 and completed in September of 2011 cost $92K (including the permits, design and finish material). It serves as my primary residence and I rent out the main house. The main house, a 4 BR, 2 BA, pays for its own mortgage and then some. I calculate that this model has a 8 year payback period.
Now that I am living in the ADU, I realize how lucky I am to have the flexibility to rent out the main house however I wish. So far, I’ve rented it out on a short term basis to people who are visiting from out of town. I’ve also been able to have a group of five friends stay at the house over a long weekend, which I would never have been able to do before. Now, I’m renting it out to a group that will be there for four months. Next summer, I may rent it out nightly or long term, depending on what makes the most sense to me.
It’s great to have the flexibility to use the main house however I deem fit; maybe someday, I’ll want to move into the house again. Or, maybe I’ll want to live somewhere else in town at some time. Any scenario I conjure up is not only feasible, but profitable. As I see it, now that I’ve built an ADU, I can live essentially for free for the rest of my life. The residential options seem limitless. What a great sense of freedom!
The ADU is 799 square feet, and for now, it houses both me and my partner. Although the ADU is situated in densely settled area, it’s set back from the street such that most pedestrians wouldn’t even know it was there. The thick staggered stud walls with blown in fiberglass insulation deaden the sounds of the world, leaving us with a quiet urban palace only 2 miles from downtown.
It was great to be heavily involved in customizing the ADU design to do exactly what I wanted. For example, I don’t like what TVs represent. But, I love movies. So, I put in a kick ass projection system that displays movies on 10 ft white wall (running off of my laptop) with awesome surround sound speakers. I like open space design, so my main ceilings are 20ft high. I like big tubs, so I have a huge soaking tub that is also the shower. I bike every day, so I have a great covered spot to hang my bike where it won’t get wet. I did not sacrifice anything that mattered to me by building a house that was under 800 sq ft. The ADU is totally luxurious.
The process of designing and building this ADU has turned me into an ADU advocate. For those wh0 take the leap, I suspect that you will also become advocates for ADUs. My personal ADU blog has thorough descriptions and videos of my building process and lays out the project costs clearly. Despite the luxuries mentioned earlier, I have a predisposition towards energy efficient building design, so that is another focus of my blog. You can read all about my ADU project and learn a lot about the design/build process at http://pdxadu.blogspot.com/.