As housing costs continue to rise in Portland, many homeowners are considering alternative living spaces. Two popular options are Accessory Dwelling Units (ADUs) and tiny homes. While they share similarities, there are significant differences in regulations, costs, and benefits that Portland property owners should understand.
What's the Difference Between ADUs and Tiny Homes?
Before diving into the comparison, let's clarify what each option entails:
ADU (Accessory Dwelling Unit):
A permanent secondary housing unit on the same property as a single-family home. ADUs can be attached to the main house (such as a basement apartment or over-garage unit) or detached (a separate structure on the same lot).
Tiny Home:
A small living structure, typically under 400 square feet. In Portland, tiny homes fall into two categories:
- Tiny Home on Wheels (THOW): Mobile structures built on a trailer chassis, technically considered RVs under Portland regulations
- Stationary Tiny Home: Built on a foundation, these must meet standard building codes
Legal Status and Regulations
ADUs in Portland:
- Fully legal and encouraged by the city
- Clear permitting process through the Bureau of Development Services
- Can be up to 800 sq ft on standard lots (1,000 sq ft on larger lots)
- No additional parking requirements
- No owner-occupancy requirement
- Subject to standard residential building codes
Tiny Homes in Portland:
- Tiny Homes on Wheels: Cannot legally be used as permanent residences on residential lots; must be parked in designated RV parks
- Stationary Tiny Homes: Must meet building codes and zoning requirements; could potentially be permitted as an ADU if meeting all requirements
- Special "tiny house" building codes are being developed but are not yet fully implemented
Cost Comparison
ADU Costs in Portland:
- New detached ADU: $200-$350 per square foot ($160,000-$280,000 for 800 sq ft)
- Garage conversion: $100-$200 per square foot ($50,000-$130,000)
- Basement conversion: $75-$150 per square foot ($40,000-$100,000)
- Permit fees: $5,000-$15,000 (SDCs potentially waived with 10-year no short-term rental agreement)
Tiny Home Costs in Portland:
- Tiny Home on Wheels: $30,000-$150,000 depending on customization
- Stationary Tiny Home: $50,000-$150,000 including foundation work
- RV park fees (for THOW): $500-$1,000 per month
- Land purchase (if placing a tiny home on its own lot): $100,000+ in Portland area
Property Value Impact
ADU Impact:
- Typically increases property value by 20-30% of the ADU construction cost
- Creates permanent addition to the property
- Becomes part of the real estate listing when selling
- Appraised as part of the overall property value
- Can generate substantial rental income ($1,200-$2,000/month in Portland)
Tiny Home Impact:
- Tiny Home on Wheels: No impact on property value; considered personal property
- Stationary Tiny Home: May add value if properly permitted, but often less than a comparable ADU
- Limited potential for rental income due to regulatory restrictions
Flexibility and Mobility
ADU Flexibility:
- Permanent structure
- Can be used for multiple purposes over time (rental, family housing, home office)
- No options for relocation without significant demolition and rebuilding
Tiny Home Flexibility:
- Tiny Home on Wheels: Can be relocated relatively easily
- Allows for lifestyle changes and moving to new locations
- Lower commitment to a specific property
Financing Options
ADU Financing:
- Home equity loans and lines of credit
- Cash-out refinancing
- Construction loans
- Renovation loans
- ADU-specific financing programs through some lenders
Tiny Home Financing:
- Tiny Home on Wheels: RV loans, personal loans
- Stationary Tiny Home: Similar to ADU options if on a foundation and permitted
- Often fewer financing options with potentially higher interest rates
Which is Right for Your Portland Property?
An ADU might be better if:
- You want a legal, permanent housing solution
- You're looking to maximize property value
- You want reliable rental income potential
- You plan to stay in your current location long-term
- You want clear regulatory guidance
A tiny home might be better if:
- You value mobility and potential relocation
- You have a significantly limited budget
- You're comfortable with the current regulatory limitations
- You prefer a lifestyle with fewer possessions and smaller footprint
Getting Professional Advice
At Portland ADU, we specialize in helping homeowners navigate these decisions with expert guidance tailored to your specific property and needs. Contact us for a consultation to explore whether an ADU or tiny home is the right solution for your Portland property.
