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When Roger Fitzsimon started seeing ADUs around the Alberta neighborhood of Portland, Oregon, he wanted one on his own property. He envisioned a little house in the backyard that could be a great resource for his household, providing a space for extended stays by family members, and income from short-term rentals. There was space for something like that on his property, if he removed an old garage. It was an idea that simply made sense.
But when Roger and his wife Martha delved deeper, they got sticker shock. A low-end estimate from an architect came in at >$130,000. That’s not unusual in Portland, where ADUs — often realized at maximal permitted size, and with higher-end features — can cost $200,000, $300,000 or even more. But Roger has a conservative approach to his own finances, and was looking for something more modestly priced.
“I was going to give up on the whole thing,” Roger says, “but Martha said ‘we will find a way.'”
They looked into a getting a tiny house on wheels and putting it in the yard, but decided against it. Among other things, it wasn’t clear at the time if it would be legal to rent it out — and Roger wanted to do everything by the book.
“I’ve got a green card,” Roger laughs. A British transplant, he didn’t want to risk his own legal status, so doing everything above board was essential.
Eventually Roger and Martha found a solution. In February 2018 they signed a contract with Wolf Industries, a Battle Ground, Washington company that offers prefab dwellings that can be used as ADUs. Wolf served as the designer, builder, and general contractor for the project. By July 2018 Roger and Martha had a roughly 300 square foot ADU on their property ready to occupy. The total cost, Roger says, was about $75-80,000, or $85,000 including furnishings.
That’s about 5 months — a fast timeline for an ADU in Portland — and the price was low enough Roger and Martha were able to pay for most of the project with savings, which moderated the financial risk. They borrowed so little, Roger says, that the whole thing was paid off six months after their permit was approved.
Two years later, Roger is thrilled with the way the ADU is working out. Mostly it has served as a short-term rental, available online as Ye Olde Tiny House. That has provided income, but beyond that, it’s been a creative success.
Early on in the process, Roger and Martha worked with Wolf to add a circular window that is a focal point of the design.
They also took pains to customize the interior details once the building was in place. Too many small dwellings, in Roger’s view, “look like Ikea showrooms.” He wanted something more unique. He and Martha curated furnishings carefully, and installed an elaborate custom sink made of petrified wood.
Most of all Roger seems thrilled that the little house has become part of people’s lives.
“We have more than one hundred five star reviews. We’ve even had people get engaged here,” he says.
Roger and Martha chose to do short-term rentals to maintain the ADU’s adaptability. That way the ADU provides income, but still allows for family visits, for entertaining, and even serves as a refuge for their own household.
“It’s like going on vacation,” Roger says. “It’s a very private, quiet retreat from the world.”
During the COVID-19 pandemic and lockdown, which is ongoing as I write this, the short-term rental business has dropped dramatically. But Roger isn’t worried. His conservative, low-cost approach to ADU investment means there is nothing to pay off now. His household isn’t dependent on rental income, like it might be if it had paid for a much more expensive ADU. The income will come back eventually, he predicts.
“It’s more of a pension plan,” he says.
Why isn’t this story more common?
Roger and Martha’s project looks like a triumph for all concerned — so why don’t we see more prefab ADUs installed?
This has been a bit of a mystery to me as an editor of accessorydwellings.org. Prefabricated dwellings and “granny pods” have long been proposed as a perfect way of creating ADUs. The idea of building something elsewhere and simply installing it in an empty space seems attractive, repeatable, and, at least from advertised prices, quite possibly economical. There could be less disruption for the homeowner, too, because a lot (though certainly not all) of the process takes place elsewhere.
As an editor, I am frequently asked by the designers and makers of prefab units to feature their products on the site. However, when I ask those makers to show me documented examples that their products have been used as permitted ADUs — rather than just one-off demonstrations or architectural models — the communication usually stops.
It’s not clear how many of Portland’s recent crop of thousands of ADUs are prefab, but the number is likely only a few percent. Roger and Martha’s is the first one accessorydwellings.org has written about.
The reasons for the scarcity are unclear, but Roger’s experience suggests some possibilities.
The logistics of installation. Since prefab units are created offsite and then moved onto the owners property, there must be enough room to deliver a building onto the site. This can be a challenge in urban environments with close-spaced buildings, fences, etc. Roger and Martha’s building was a tight squeeze but it got through.
Customization and related permits. There are practical limits to the customization of prefab buildings, and their ability to be adapted to a site. For example, prefab homes advertised as ADUs are almost always single-story — not necessarily ideal for skinny urban spaces.
It’s not impossible to customize prefab ADUs, Derek Wolf of Wolf Industries explains. However, it does complicate matters with inspections. Inspections work differently for prefab structures, he says. Designs are created and approved in advance by a state building inspector — in this case, one from Washington state’s Department of Labor and Industries [which has reciprocity with Oregon]. Pre-approval is good, in that it can speed things up for everybody. Small changes, like the circular window in Roger’s ADU, or different roof or siding materials, are possible without creating the need for a whole new inspection and approval of the plans. But larger changes may require a new design to be approved, adding time and expense.
Finally, the function and charm of many good buildings comes from the way they have been adapted to the site. This may be difficult with prefab buildings. For example, my own ADU has windows carefully angled to provide a vista view, and other features that simply wouldn’t be relevant if the building was placed somewhere else.
My guess is that at some point, the level of customization needed or desired by the homeowner might become too much of an expense or difficulty for prefab to work — and conventional construction will be needed.
Finally, local inspectors may not yet be accustomed to this form of housing. On Roger and Martha’s project, the building was inspected by state officials, but local inspectors were still involved when it came to connections to city services like sewer and electricity. Roger says there were some delays in this stage.
“The inspectors were very detail-oriented. A lot of things had to be adjusted,” Roger reports. “We realized we were guinea pigs to a certain extent.”
But Wolf worked with the city until everything was approved, and now Roger and Martha have had their economical, artistic ADU for nearly two years.
The voice of experience
When I ask Roger for his advice for people considering building an ADU, he emphasizes surveying the possibilities first.
As someone who’s talked to a lot of families about their ADUs, I’d add a few things. It’s evident Roger and Martha took on their ADU project with clear ideas of what they wanted to accomplish — in terms of money, design, and how the ADU was going to fit into their lives. The prefab form ended up being a good solution for them.
Though prefab might not suit every ADU project, Roger and Martha’s clear and creative thinking is a thing every potential ADU owner should emulate.
I love ADU’s and I’ve stick built two of them on my properties in Charlotte, NC.
I rent them as extended stays on travel sites and my own website. $85,000 for this all in, delivered is way too much money IMHO. I spent $74k on a 2 bed 1 bath (730 square foot) and $88k on a three bedroom two bath ADU. $100k, $200k or $300k for an ADU? What in the world are people smoking there?
Hey Andy, nice to hear from you again. I think you’re forgetting that people can want different things from their ADU projects.
It sounds like your projects are intended to be income-producing rentals. But some people aren’t building that. Maybe they’re building a place they or their parents are going to move into — so they’re building something a lot bigger and better than is strictly necessary. Or maybe the ADU has a garage and a workshop that’s part of the structure. On top of that, economies differ (not sure how much an electrician costs in Charlotte?), and projects differ.
So there are actual reasons — beyond whatever people are smoking.
For me, the problem with ADU costs is that the people who could most benefit from an ADU — people without any passive income, or any place for multigenerational living — get priced out. That’s why I’m interested to see if prefab is a realistic path forward.
What do you dou for sewage and water?
Robert, according to my interview with Roger, there was some excavation on the property in order to connect utility lines. However, the length of these connections was fairly short because they were able to hook into the connections for the main house.