Sellwood ADU Rules, Costs, Permits & Resale Value

Thinking about adding an ADU to your Sellwood‑Moreland home? You are not alone. With strong rental demand, multi‑generational living needs, and a neighborhood feel that values flexibility, ADUs are a practical way to create space and build long‑term value. In this guide, you will learn how ADUs work in Portland, what they typically cost, and how they can influence resale in Sellwood‑Moreland. Let’s dive in.

What an ADU is

An accessory dwelling unit is a legally permitted secondary home on the same lot as your primary house. You will see three common types in Sellwood‑Moreland:

• Internal conversions such as a basement or attic unit
• Attached additions that extend the existing house
• Detached ADUs, often called backyard cottages or DADUs

Each type has different design, cost, and permitting considerations, so your lot and goals will guide the choice.

Why ADUs fit Sellwood‑Moreland

Sellwood‑Moreland is a mature, walkable Southeast Portland neighborhood with access to parks, shops, and transit. Those features support stable rental demand and make ADUs useful for many households. You can use an ADU for long‑term rental income, a home office, or to house relatives while keeping privacy for both households.

Many lots offer yard space and established trees. That character is part of the appeal, and it can also shape feasibility and costs, especially when tree protection or site work is required. The key is to align the ADU type with your lot, budget, and intended use.

Key rules and permitting in Portland

City rules evolve, and the Portland Bureau of Development Services is the authority for current zoning and permits. Use the points below as a roadmap, then verify details with city staff before you design or build.

Where ADUs are allowed

ADUs are generally permitted in most Portland single‑dwelling residential zones. Confirm whether a small lot size, overlay zone, or a Sellwood‑Moreland plan district adds conditions on your property.

Types you can build

Internal, attached, and detached ADUs are typically recognized. Your lot coverage, setbacks, and utilities often influence which type is most practical.

Size, height, and placement

Cities set limits on ADU square footage, height for detached units, and required setbacks. The exact numbers depend on zoning and overlays. Ask BDS for the current standards on your specific lot.

Parking requirements

Many ADU projects in Portland do not require new off‑street parking, especially near transit. There are exceptions, so confirm parking rules for your address early.

Owner occupancy and rentals

Owner‑occupancy and short‑term rental rules have changed over time. If you plan to rent the ADU, check current city requirements, licensing, and whether your property is eligible for short‑term use.

Historic or conservation areas

Parts of Sellwood have historic character. If your property sits in a historic district or conservation overlay, additional design review or approvals may apply.

Building and life safety

ADUs must meet the Oregon Residential Specialty Code. Common focus areas include fire separation, safe egress, ventilation, and energy efficiency. Plan for inspections at milestones.

Fees and possible impact charges

Expect permit and plan review fees. System development charges or other impact fees may apply depending on your project and any current city programs. Ask about any fee waivers or incentives that may be available.

Typical permit timeline

Most projects follow a path of pre‑application questions, plans, submittal, review, corrections, permit issuance, inspections, and final approval. Simple conversions can be faster. Detached ADUs with site work often take several months from design through final.

What ADUs cost here

Costs vary widely based on type, size, site conditions, and finishes. National summaries often place detached ADUs in the low to mid six figures, and the Portland area tends to run at or above those averages due to labor, permitting, and site complexity. Internal conversions usually cost less than new detached structures because you are using the existing shell.

Plan for these categories when you build your budget:

• Design and permitting: architects or designers, engineering if needed, permit and review fees
• Site work and foundations: grading, demolition, foundation or slab, stormwater, and tree protection
• Structural shell and envelope: framing, roofing, siding, and insulation that meets energy code
• Systems: plumbing, electrical, HVAC and ventilation; service upgrades may be required
• Interior finishes: kitchen, bath, flooring, cabinetry, fixtures, and appliances
• Utilities and connections: sewer and water connections, stormwater management, and gas lines if used
• Access and exterior: pathways, retaining walls, parking or driveway adjustments, landscaping
• Contingency and soft costs: contractor markup, inspections, taxes, and a 10 to 20 percent contingency

Biggest cost drivers

• Type and size of the unit
• Utility upgrades and trenching distances
• Site constraints such as slopes, retaining, or large tree protection
• Finish level for kitchens and baths, which can swing costs significantly

A realistic plan starts with at least three bids from Portland‑area contractors who have completed ADUs, plus early calls to BDS and local utilities about hookups and potential charges.

How to finance an ADU

Common options include cash, a home equity line of credit, a home equity loan, construction or renovation loans, and specialty ADU lenders. Lender policies vary. If you plan to use ADU rent for qualification, ask your lender how they treat projected income.

Resale value and rental income

ADUs can strengthen your property’s appeal. Many buyers value the flexibility of long‑term rental income, a private suite for relatives, or a separate workspace. In neighborhoods like Sellwood‑Moreland with strong amenities and steady rental demand, those features often translate into broader buyer interest and, in some cases, higher sale prices.

That said, resale impact is not one size fits all. The value premium depends on the ADU’s quality, permitting status, local buyer mix, and the rental market. A permitted ADU is significantly more attractive to buyers and lenders than an unpermitted space.

Use two practical lenses when you assess value:

• Income approach: Estimate market rent, subtract operating costs, and apply a local capitalization rate to frame an income‑based value contribution.
• Comparable sales: Review recent Portland or Sellwood‑Moreland sales with legal ADUs and compare to similar homes without ADUs for both price and time on market.

Buyers who prefer a large yard or strictly single‑family use may see an ADU as a negative, so design and placement on the lot matter. For sellers, keep permits, plans, and any rental history organized so buyers can quickly validate the unit.

Your ADU checklist

1. Confirm zoning and lot eligibility with Portland BDS, including any overlay or historic district status.
2. Order a site survey and map constraints such as lot coverage, setbacks, trees, utilities, slopes, and access.
3. Choose your ADU type based on budget, yard space, and target use, whether rental or multi‑generational.
4. Consult architects or designers and get bids from local contractors with Portland ADU experience.
5. Verify permit fees, any system development charges, utility connection costs, and any active city incentives.
6. Plan financing and confirm lender requirements, especially if using projected rent.
7. Secure permits, schedule inspections, and obtain a certificate of occupancy before renting or selling.
8. If selling, compile permit records and, if applicable, rent history and operating costs for buyers.

Who to contact locally

• Portland Bureau of Development Services for zoning, permits, and code questions
• Portland Housing Bureau for programs, incentives, or guidance
• Local utility bureaus for water, sewer, and stormwater connection requirements and fees
• Multnomah County Assessor for questions on assessment changes and records
• Local architects, contractors, and appraisers with Portland ADU experience for feasibility and valuation

Get local guidance

Building or buying a home with an ADU is both a design project and a financial decision. You deserve a clear path from feasibility to permits to resale positioning. Tesoro Real Estate blends construction fluency, market analytics, and concierge coordination to help you budget wisely, document permits, and present your property to the right buyers across Portland and beyond.

Ready to map your ADU plan or evaluate an ADU property in Sellwood‑Moreland? Connect with Gaston Sanchez for a complimentary consultation and home valuation.

FAQs

What is an ADU in Portland and how is it used?

• An ADU is a permitted secondary home on the same lot as your primary house, commonly used for long‑term rental income, multi‑generational living, or a private workspace.

Are ADUs allowed on most Sellwood‑Moreland lots?

• In many Portland single‑dwelling zones, ADUs are allowed, but you should confirm your lot’s zoning, any overlays, and site limits with the city before you design.

Do I need to add parking for an ADU in Portland?

• Many ADU projects do not require new off‑street parking, especially near transit, though there are exceptions that BDS can confirm for your address.

How long does it take to permit and build an ADU?

• Simple internal conversions can move faster, while detached ADUs with site work often take several months from plan preparation through final inspection.

How much does a detached ADU typically cost here?

• Costs vary, but national summaries often place detached ADUs in the low to mid six figures, and Portland projects can be at or above that; get multiple local bids.

Will my property taxes change after adding an ADU?

• Adding a new dwelling unit typically triggers reassessment, so check with the Multnomah County Assessor and a tax advisor about property and income tax impacts.

Can I use an ADU as a short‑term rental in Sellwood‑Moreland?

• Short‑term rental use is governed by city licensing and zoning rules, so verify the current requirements and eligibility for your property with the city before you rent.

What if the ADU on a home I want to buy is unpermitted?

• Unpermitted units can complicate financing and resale; explore a legalization path with the city or adjust your offer to reflect the cost and risk if legalization is not feasible.