A one-stop source about accessory dwelling units, multigenerational homes, laneway houses, ADUs, granny flats, in-law units…
“In some ways building an ADU is just like buying a house. You don’t do it for the money. Lots of people tried and some people did okay for a bit. But a house isn’t a very good investment. You do it because it’s where you want to live. We have a society that pushes people to make decisions on financial grounds, but I think the non-financial benefits are so great that the financial side makes sense to think of as secondary.” – Charlie Weiss
Years ago Charlie Weiss’s mother had a house with an ADU, which provided additional rental income, companionship, and security. Charlie eventually took over his mother’s home and appreciated the advantages of having an ADU. The economics of a rentable space were appealing to Charlie and his partner Katharine, so when the couple built their own home they designed it to include an apartment. They’ve now included ADUs in two more homes they’ve built and they’re grateful that Portland’s policies now support the creation of ADUs.
“We have lived in 3 houses in a row with ADUs. At the time we built our first home, ADUs were allowed only in existing homes. An owner could convert existing space into rental space, but it was not legal at the time to build an ADU in a new house. When we built that house in 1994 we built an ADU into it, and we took the time to convince the city it was okay. In the end the city said, ‘You should have done what everyone else does and just not told us about it.’ So we didn’t install the kitchen appliances until after the final inspection. We got it permitted when the city finally made it legal. When we built our current house it was one of two attached houses on a double lot, one for us and the other on spec, both with ADUs.” – Katharine Lawrence
Charlie and Katharine explained that it was a difficult for them to separate the cost of their ADU from their total construction budget because they built multiple units at once. Additionally, because they built the ADUs over the garages at The Leapfrog House, it’s difficult to parse out just the cost of the apartments.
“It’s hard to tell what the cost was for each ADU. Do you allocate a portion of a roof that went over it? That roof would have gone over the garage anyway. The plumbing was designed to serve both our home and the ADU. The after-construction build-out was in the neighborhood of $20,000-$40,000.” – Katharine Lawrence
Charlie adds: “From a purely spreadsheet economics standpoint, when you’ve enclosed as much space as we have, the additional cost to enclose the space above the garage is minor. It’s a good investment and we’re getting $1000 a month renting it out, covering about a third of our housing cost.”
Charlie notes that he and Katharine were inspired to build ADUs because it was “a good way to increase the density in this neighborhood.” By constructing two houses, each with its own ADU, they were able to increase the number of living units on the lot from 1 to 4 without changing the character of the neighborhood.
“As we look at shoehorning another million people inside the UBG [urban growth boundary] over the next twenty years, we will need to look for creative infill strategies. ADUs are the lowest impact option for increasing density. It’s a real opportunity.” – Charlie Weiss
Katharine explains that driving factors for them during the design process were efficient use of space, materials and energy. Their litmus test was whether they were creating spaces they would want to live in themselves. They wanted to build their home and ADU so that they could “age in place,” living in either the main house or the ADU.
“It’s flexible. With access from the outside in two places, we could, say, rent out the entire top floor, connecting our portion of it to the apartment. Or we could open up the ADU as part of our main living space.” – Katharine Lawrence
Rental income was a key factor in their decision to create their first ADU and it’s continued to be important for the next two ADUs, but Katharine and Charlie explain that community-building has become just as compelling.
“The economics are a starting point, but the community is important, too.” – Charlie Weiss
Katharine continues: “We’ve become close with most of the tenants who’ve lived in our ADUs and we remain friends with them. When you go out of town you look after each others’ plants and pets and mail. There are lots of things that aren’t quantifiable but really appealing, like the extra security of having more people around. So we prefer to have a relationship with our tenants. It’s set up so that we don’t have to interact, but we’ve had some tenants who are more like family members, living in each other’s pockets and borrowing each other’s beer.”
Charlie chimes in: “The beer actually flows more in the outward direction from our place…”
Katharine explains that they screen their tenants and they’ve always been great renters. Over the years their tenants have included a young mom and her 4-year-old daughter and a single woman law student whose boyfriend eventually moved in, too. One tenant in her twenties lived with them for several years in their previous ADU, and moved with Charlie and Katharine into their new house with an ADU. This former tenant’s father is the current tenant.
One of their tenants with chemical sensitivities said that she had never felt better than when she lived in Katharine and Charlie’s ADU. And no wonder. Katharine and Charlie’s project was built to LEED platinum standards. The ADU features cork floors, all local lumber, energy-efficient appliances, and both hot water and the space are heated by a ground-source heat pump that delivers heat through radiant panels. (The couple notes that there’s a challenge placing furniture in front of radiant panels, but otherwise they’re pleased with the system.) The ADU’s envelope includes R-30 walls and R-60 roof. With big windows on three sides, the ADU also has good natural daylight and views. Thirty solar panels on the roof provide about 40% of the annual energy. The homes also have a rainwater harvesting system with two 3000 gallon cisterns, which provides all water – including drinking water – for most of the year.
In addition to fitting in a long list of sustainable features, the attached houses also maximize storage.
“Our ADU actually has a remarkable amount of storage space and our tenants appreciate that. We did a good job filling the volume of the space with storage. It was harder for a single mom with a daughter – it’s a little tight for two people. A kid or a windsurfing habit would really change their storage needs. There’s no other room to get away except the bathroom.” –Katharine Lawrence
When asked about the challenges they faced in building their ADU, Katharine joked that the hardest part was putting the IKEA cabinetry together. Then she explained that financing the project was the biggest challenge. When they began the project the housing market was hot and building LEED platinum houses on spec seemed like a good idea. By the time they were ready to sell their spec house, the housing market had plummeted.
“We financed the project as part of our mortgage. We sold our first-born child. It was really bad timing because we thought the sale of the second home would pay off the other house and would go a long way towards paying for our house. But we didn’t sell it till last spring so we carried both houses for 5 years.” –Katharine Lawrence
Charlie adds: “Because of the timing things got dicey with the bank. The ADU made it affordable. Without it we would have been in a lot worse shape. It’s possible that, in fact, the ADU did keep us from losing the house. The ADU has never been vacant for more than a week or two.”
Although Katharine and Charlie assured me no children were actually sold in the making of their ADU, the cost of financing the property for several years certainly put a damper on their spending. Additionally, the waiver of System Development Charges (SDCs) had not yet gone into effect for ADUs.
“The SDC fees were annoying. It was just after we built this house that the market tanked and lots of people lots their jobs. They upped the incentives to build ADUs and that’s a window we missed.” – Charlie Weiss
(Fortunately, the waiver of System Development Charges for ADUs has been extended to 2016, so the window is not yet closed!)
Although the ADU is currently rented as a long-term rental, Charlie and Katharine appreciate that their ADU offers them flexible space. The ADU could be used as a studio space for their daughter who is an artist. It could be used for an elderly parent. It could also be workspace. They figure the ADU space could comfortably accommodate 2-4 adults working, which would be more affordable than a space downtown – and certainly a shorter commute.
“We’re on a bus route and a bike lane that goes downtown, so it’s feasible for someone to live here and not own a car. I think that’s a really cool thing to be able to offer someone. It’s rare to be able to live in a place this far from downtown without a car.” –Katharine Lawrence
When asked what’s surprised him about having an ADU on his property, Charlie replied: “How easy it is to forget it’s there. It’s really easy to forget there’s someone else living under our roof. It won’t occur to me for days at a time. That I think it’s really cool. It gives us both privacy.”
When asked if they have any plans to move or sell their property in the next decade, Charlie and Katharine are in agreement that they don’t know yet. Katharine said: “Our daughter will be 18 next year. We may be attracted to building a trailer for the back of our car or living a more urban life. Moving abroad. We’re flexible but no plans.”
Charlie adds: “So many things are unpredictable about life. I can see dying here in 40 years or cutting out in two.”
So what advice does Katharine have for homeowners considering creating an ADU on their own property?
“If someone is just thinking about building an ADU, that’s a huge first step. It’s not for everyone. If you’re even considering it you’re one of the rare people who might make a good landlord. If it’s strictly for the money I suppose you can make it pencil out, but it’s very much about the personalities and the inclinations of the people who will be living in the house. Really think about your reasons.”