Let’s talk property investment. Real estate investing can be exciting and incredibly lucrative! But, for first-time investors, or those investing in a new market, jumping in can be daunting. That’s where I enter the conversation as your expert in real estate investing and have the added experience as a certified ADU specialist. I’m able to advise on which properties can have an ADU added, which ones are best with an ADU, and the maximum you should be spending to get the best ROI.
Today we are exploring why Accessory Dwelling Units (ADU) are one of the safest and most cost-effective forms of property investing. And a very feasible jump into this world for many. Let’s dive in. And, remember, if anything piques your interest, reach out. Let’s chat about your next real estate endeavor.
What is Considered an “ADU”?
Accessory Dwelling Units, often referred to as ADUs, are additional attached or detached independent residential units on a property. The State of Oregon specifically considers ADUs as, “[secondary to] the primary dwelling but serve as complete independent living units with kitchens, bathrooms, and sleeping areas. An ADU may be located within, attached to, or detached from the primary dwelling.” These units could be…
- Converted basements
- Converted garages
- Attached properties (i.e. a duplex)
- Detached properties (i.e. guest house)
ADUs have only been allowed in Washington and Multnomah County since 1983. However, the counties have recently shown support for ADU investments due to Portland Metro’s concerning lack of affordable housing. Recent statistics have shown that ADUs are much more affordable for tenants and support a stable secondary income for homeowners. The Oregon Department of Land Conservation and Development is currently in the process of enforcing code changes (including relaxed design requirements) to make it easier for homeowners to build ADUs.
Why Are ADUs the Safest Investment?
Two streams of income, speedy mortgage payoff, investments back into the property and increasing home value, and tax deductions (need I say more?)
A multi-unit ADU allows for the homeowner to live in one unit, while the other(s) are available to lease out. This provides a steady, supplemental stream of income in addition to the homeowner’s regular income. As an ADU owner, not only will this cover regular expenses but will allow you to quickly pay off the property mortgage and invest money back into the property.
Let’s Talk Long Term
A 2020 study has shown that an additional unit on the property contributes a 25%-34% value increase in comparison to a single unit property and a 51% increase in the resale value of your home. Yep, you read that right – a 51% increase! As we discussed above, two streams of income allow for a profit margin to invest back into the property. Regardless of the condition, you purchased the property in, ADUs provide a financial buffer to renovate and update, consequently increasing the value of your property tenfold!
We only grazed the surface of ADU property investments! Are you interested in taking the next step in real estate investing? At Rebecca Wilson Realty, we have property investing and client success down to a science. With my expertise in navigating the minutiae of a deal, fierce and clever negotiating skills, and deep knowledge of the market and trends, coupled with Brandon’s vast knowledge of housing structures, building systems and geography, you’re getting the premium package that you can’t get anywhere else.
Read up on our process here. There’s no better place to invest in your future than Portland!