Finishing our basement to rent ... make it an ADU or just a regular basement and get special permission with City to add kitchen to our title?

Asked by Patricia, Portland, OR Thu Jun 24, 2010

If we want to finish our basement (using licensed/bonded contractors) in such a way that we could use it as a self-contained rental (legal egress in bedroom, direct outside access, living rm, bath, kitchen, etc.) what's the difference (advantage? disadvantage?) of actually going through the hoops of getting it designated as an ADU? We''re going to have it built out in such a way that it could still simply be accessed from the rear and main floor of the house (through a shared laundry room) and hence still be used as a family room/spare bedroom/etc. in the future, rather than as a rental/ADU. So why would it matter if it's an ADU or not? How does that increase the property value over simply having a nicely finished basement (that could be "separate living qtrs)? I mean, as a homeowner you can rent out your finished basement to a tenant w/o having to have it designated as an ADU, right? Anyone have any recommendations?

We live in Concordia FYI in case that matters.

Thanks in adv!!

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June Lizotte, Retired Broker’s answer
June Lizotte,…, , Portland, OR
Thu Jun 24, 2010
Keep in mind, Multnomah County and specifically City of Portland has very specific regulations pertaining to ADUs. For instance, one example some basements won't qualify as spaces to be converted if there is limited ceiling height. there will be specific limitations specific to any given property...Check with the prevailing entities first to save yourself some grief.

In any regard...You will also have to qualifty for permits for mechanical, plumbing, electrical depending on the scope of the work to be done.

Keep in mind this important expensive detail: Projects that increase impact on the city infrastructure will be subject to System Development Charges...a one-time fee based on new use/ increased use of the property..THIS CAN GREATLY Increase your project budget. Check with the City of Portland BEFORE planning your project (where this SDC fee applies) To view costs please try this link to view their handout of costs/fees of SDCs
There is more information at the Portland Bureau of Development Services...I think this is the web address You can get all the phone numbers and information you need there. I hope this helps. My advice is to check with City/County BEFORE you start...weigh the costs both of construction materials, labor and of all Permit and Develpment fees, and so much more.

Best to you,
June Lizotte, Principal Broker
June Lizotte Real Estate
Providing REAL Service
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Tom Inglesby, Agent, Portland, OR
Thu Jun 24, 2010
Patricia, there are many questions to ask. Do you have windows that are with in 3 feet of the floor? What is your ceiling height? Are you on a corner, how much will be devoted to the unit verses the rest of the house? Talk to zoning. Many times you can add 2 dwelling units on corner lots not just anywhere in a neighborhood. I would try and make the remodel work into the house so if some one does not want the rental when you sell it will not be a problem. You might be surprised at the cost to be able to rent some part of the house out? Good luck.
Tom Inglesby, Broker
RE/MAX Equity Gorup inc
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Howard Page, Agent, Portland, OR
Thu Jun 24, 2010
The addition of an ADU (accessory dwelling unit) typically involves constructing additional square footage and is either attached or detached. The advantage is the cost of development is far less as the cost of land is not a factor. ADU's are allowed in many neighborhoods these days as a result of Metro density requirements. If the lot is adequate to meet all the zoning and construction requirements, adding square footage through the addition of the ADU can be very valuable project. Whether you rent out the space, devote it to family members, create guest quarters for long stays, the added value to the home is generaly far more than the cost of construction. In your case, I'm not certain that it's necessary to go through the ADU process as you're not adding square footage. You would be required to meet all applicable building codes however. A conversation at the City/County planning desk would answer that question. In insist you make that your next step prior to doing any more thinking/planning. In any event, I would provide separate access if possible. You might also incorporate interior access to the main dwelling for versatility in the future. You may want to add the necessary plumbing stub-outs etc for future hookup and have the laundry central to both the basement and the upstairs. This could save you money upfront and allow the basement to be completed with full kitchen, laundry etc as the situation requires. Thank you, Howard
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Janeese Jack…, Agent, Portland, OR
Thu Jun 24, 2010
P: I guess I'd have to know exactly what the "hoops" would involve and the cost involved in getting the ADU designation. I have several rental properties and see that most renters would not ask or care. I believe to the average homeowner that designation would not necessarily add that much value (if they were truly utilizing the space for "separate living quarters" or "guest quarters", etc). It would definitely make a difference to an investor, who was wanting to rent both spaces. I'm assuming you have researched the feasibility of a permit in your particular neighborhood to add the 2nd space?
Sounds like an exciting of luck!
Janeese Jackson, Principal Broker
Real Estate Resource
503-709-0802 or
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0 votes
Hi Janeese, i am actually responding to the "Renter" a griffin below, i have read that the city of portland repealed the provision whereby a homeowner had to live on the property to be able to rent out the units separately. i think this happened in 1998.
Flag Thu Feb 6, 2014
Question... if an "investor" wanting to rent both spaces, independantly of each other, wouldn't that landlord need to live in the home that was primary to the ADU? I'm in a situation where I am renting an ADU, however the owner is trying to rent out the primary SFR... on CRAIGSLIST no less... ugh. I thought in (WA county OR) HE had to live there, not just rent out two halves of a house for income and reside elsewhere...?
Flag Mon Nov 4, 2013
HLR, , Oregon
Thu Jun 24, 2010
It also depends on Zoning, will a 2 unit or ADU be allowed, one of the reasons for the ADU permit. Other wise a in law set up might work. Too when you refinance with a ADU, it may cause different rates to refinance, again another reason for a finished basement still as a Single Family Dwelling. Check your zoning, first before you move too far in this process then have the whole thing stopped or change your hopes.

Best to you.

0 votes
The Stephen…, Agent, Portland, OR
Thu Jun 24, 2010
If you are going to spend that much money - hiring contractors to do a full remodel with a kitchen and egress and the rest - I would highly recommend being above board on all legal matters and getting the ADU designation.
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Corey Eubanks, Agent, Portland, OR
Thu Jun 24, 2010
Having a legally designated ADU typically adds resale value to a property in the future. It can also provide assurance to prospective tenants that you are a proactive landlord, allowing you to attract a higher caliber of tenant applicants and possibly charge a higher rent.
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