An Outside-The-Box ADU Designed to Maximize Rental Income

We don’t get to meet many of our customers since we have an efficient distribution setup shipping directly throughout North America without a traveling sales team. Local projects are super fun since we get to meet our customers and see the wood installed. A few of them are actually interesting designs for case studies to a national audience. Last week I was driving down a side street near my house and out of the blue came upon an accessory dwelling unit (ADU) with our wood on it that I didn’t even know about. I talked up the owner who was prepping it for a new tenant and turns out it is a very interesting ADU example due to low build budget and minimal tax exposure.

The owner is a financial analyst turned realtor turned landlord, and his goal was to increase rental income on one of his properties as effectively as possible. The design was developed to lower construction costs, minimize City of Portland building compliance costs and restrictions, and to avoid a county tax assessment increase based on site improvements. The property is part of his long-term income portfolio, so the ADU was built for cash flow and not resale value.  The owner chose unoiled gendai wood from us for lower cost and with the intention of embracing the Japanese no-maintenance, patina aesthetic.

Shou Sugi Ban Tiny Home ADU - Portland OR Gendai 3 - Nakamoto Forestry

Compliant navigation of laws and code ended up with an outside-the-box design that only needed mechanical permitting and inspections by the city, but no building permits that would trigger a county property tax value reassessment. The owner chose one of his rental properties in a good neighborhood and with a large backyard. He then had a custom tiny home built and moved to the yard, in which case it is insured and permitted as “personal property.” He then added one ancillary shed onto two sides of the trailer, each under the 200SF compliance threshold for permitting. With sliding door interior walls at the transition between trailer and shed this increased the habitable floor plan to about 800SF.

Shou Sugi Ban Tiny Home ADU - Portland OR Gendai 4 - Nakamoto Forestry
Shou Sugi Ban Tiny Home ADU - Portland OR Gendai 7 - Nakamoto Forestry

Electrical, plumbing and HVAC, as well as interior wall sheetrock layout, flooring, door schedule, and siding all had to be designed with transitions or other specific requirements to keep permits within the mechanical code compliance department at the City. Though a narrow design parameter developed in consultation with the City code authorities, the owner figured out how to do the whole thing without a building permit. That would have triggered about $30k in additional permitting fees, not to mention increased assessed value by the county Tax Assessor.

The owner’s final construction costs were $50k less than a standard ADU, rental income almost doubled for the property, and there was no resultant tax increase. It is considered personal property by his homeowner’s insurance policy. With high ceilings, well-placed fenestration, and consistent flooring, it also has an expansive feel for such a small dwelling. It rented immediately.

Visit this home’s Project Page for information on Nakamoto Forestry products used, specs, and the full image gallery!