Blog Stories ADU's as an investment

ADU’s as an investment

By Carson Mead, November 21, 2019

My client was interested in purchasing a multi-family property as part of a 1031 exchange as an investment. We looked at duplexes, triplexes, and at my suggestion also included single family properties with ADU’s. We looked at a lot of different properties around Portland to try and find properties that would perform well in their return, as well as have updated systems and solid bones to keep operating costs low.

Eventually a unique opportunity came up of a single family home with a detached ADU for sale that was situated on an alley with great access. We had a property manager assess the potential rents of the ADU and the house, and it all penciled out as being a sound investment. The ADU was only two years old, and with new systems and custom elements, looked to be in great condition. The main house had the feel of an owner occupied home that was well taken care of, with a newer roof, renovated kitchen, and vaulted ceilings on the second floor.

We were able to negotiate a win-win price. Moving into inspections brought up many of the house conditions that we expected, though the sewer scope revealed significant issues. We were able to get that repair negotiated as a condition of closing, and they moved forward. It was a very complicated deal, with multiple contingencies on the sale of properties for both the buyers and sellers, as well as the 1031 exchange. It took a lot of work to get the deal done, but in the end we were able to close and my buyers are very excited for their new investment.

Please feel free to be in touch with me if you have any questions that I can answer, or if you’d like to talk about buying or selling.



Carson Mead

Broker | ADU Specialist

My first introduction to the world of real estate came in 2004, when at the age of 22 I bought my first home in NE Portland with my sister. I still remember what a monumental life transition that was. Buying my own home laid the foundation for a lifelong love of all things related to houses. I enrolled in a year-long Building Construction program to gain more knowledge in housing systems and techniques. I have used those tools to enhance my own home both inside and out. I joke that my favorite part of a house is the basement, as that’s where I can see the health and maintenance of a home’s systems: plumbing, electrical, HVAC, foundation etc. While a home inspector is the professional on helping to understand the story of a home, I like to provide as much due-diligence as possible up front before you spend the money and get into contract. Ultimately my goal is to meet you in any endeavor that you are wanting to undertake. If you are looking to sell, I will develop a strategy that makes sense for you with your goals, timelines and marketing strategy. If you want to invest in your home before going on the market, we’ll look at what you can do to maximize your profit: be it refinishing floors, painting, modifying light fixtures, and getting it staged. If you need to stay in your home while selling, I’ll bring in my stager to help get perspective on how to pare down the feel of your home and have tangible goals to achieve in getting ready to go on the market. If you are looking to invest in Portland real estate, we can talk about the big four in analyzing properties. Rental income, principal reduction, equity growth and tax benefits. I work with spreadsheets to outline these assets so you can see the short and long term performance of your investment. Once last piece of my professional and personal life that I spend a lot of time thinking about are ADU’s (Accessory Dwelling Units). Also known as mother-in-law units and granny flats, these can be detached or attached. When I see a home, I look at the property in detail to see how the home is oriented on the lot and if it is ripe for a detached ADU (new construction), or if it is a good prospect for creating an attached unit (a basement apartment). I also look at the zoning to see what kind of potential this could add. I am in mid-process building my own detached ADU. The structure is going to be modern with clean lines and open concept. I live on a corner lot, which means the ADU can have it’s own street entrance. I also have zoning which will allow me to split the lot if I choose and sell it separately at some point. My plan is to keep it as a rental, but this will create a lot of flexibility both short and long term. I am a cooperatively focused broker, with a passion for helping people achieve their goals and succeed in their endeavors. I am patient, understanding, trustworthy, and truly care about your best interests. I serve on my neighborhood association board and the larger Northeast Coalition of Neighborhoods. Please let me know if you'd like to share a beverage, coffee, tea, beer/wine to talk about what’s important to you and see if it would be a good fit to work together. All the best— yelp
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