January 30, 2025 • 14 mins
Summary
In this episode, Doug Varenas discusses Accessory Dwelling Units (ADUs), exploring their definition, benefits for multi-generational living, investment opportunities, and the regulations surrounding urban and rural ADUs. He also highlights the Washington Bond Program, which assists first-time homebuyers with down payment assistance.
Takeaways
ADUs provide independent living spaces within or adjacent to homes.
They are beneficial for multi-generational families and adult children with disabilities.
Investors can leverage ADUs to maximize rental income from existing properties.
Urban ADUs require specific permits and zoning compliance.
Rural ADUs have different size and regulatory requirements compared to urban ones.
The Washington Bond Program offers financial assistance for first-time homebuyers.
ADUs can be a cost-effective solution for housing needs.
Permitting for ADUs can be expensive but is often worth the investment.
ADUs can help alleviate housing shortages in high-density areas.
Understanding local regulations is crucial for successful ADU development.
Chapters
00:00 Introduction to Accessory Dwelling Units (ADUs)
02:51 Benefits of ADUs for Multi-Generational Living
07:18 ADUs as Investment Opportunities
10:00 Regulations and Requirements for Urban and Rural ADUs
14:30 Washington Bond Program for First-Time Homebuyers
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello and welcome to the Spotlight Vancouver podcast. I am your host Doug Varenas, licensed
(00:07):
realtor in Oregon and Washington. And today we are talking about accessory dwelling units
or ADUs. We're going to talk about what they are, a little bit of the general regulations
of rural and urban ADUs and who an ADU might be right for. And stick around to the end.
I'm going to talk a little bit about the Washington bond program and how it's helping first time
(00:31):
home buyers with down payment assistance. But first, we're going to get into ADUs accessory
dwelling units. Now, I get a lot of questions about ADUs because people are beginning to
see the utility that they provide. Now, an accessory dwelling unit is sort of like an
independent apartment or living area that can be within a home or it can be detached
(00:55):
and adjacent to the home. And it usually includes its own bathroom, bedroom and kitchen. So it's
basically sort of like a mother-in-law apartment, mother-in-law suite. And there's a couple of
people that I think this is going to be really useful for. And part of those part of that
audience is going to be in that name, mother-in-law, or, you know, if you're looking for a multi
(01:18):
generational living situation where you have elderly parents that are going to be living
with you because they can no longer live without sort of having some extra help or an eye on
them, that can be a great solution for people. And I don't think we've begun to see that
quite as much. You're seeing a little bit more. And what I'm seeing is older parents
(01:40):
actually who are looking to live with their grown children in a multi generational setting,
and they're looking to pull their, pool their resources. So you're having usually the elderly
parents that have a little more money and they are buying a property and they don't
want to live necessarily in the same house or they want to have their own separate living
(02:00):
area while they're living with their children. And I think this is a great situation for
people because it, there's a lot of synergy there with the parents who might at some point
need some extra help living independently, but they don't want to go to like a facility.
And also for the children who may have trouble affording a home and also could benefit from
(02:24):
having grandparents nearby, you know, if and when they decide to have children. So I find
that that's what I'm seeing out there with ADUs is that it's for multi generational living
and it's really convenient for that. Another set of people who might benefit from an ADU
(02:44):
are parents that have adult children or soon to be adult children who have a disability,
who may need some extra help, but want to live quasi independently and the parents want
to keep them kind of nearby. Again, this can be pretty cost effective instead of having
a like day program or some facility where they're living in where they're not going
(03:05):
to be as independent or they're going to be further away. I think it's a great way to keep
those adult kids who may need some extra care close to you and give them the opportunity
to have a little more independence in their living situation. But those are the two main
I forgot one. Whoops. The other one are investors. Let's not forget about the investors out
(03:26):
there. I almost forgot. I and this applies to myself because recently I looked into having
an ADU built on a rental property that we own in Carter Park neighborhood, Vancouver,
so pretty dense neighborhood, very walkable neighborhood. And my thesis on real estate
investing has changed a little bit, especially in this area where the ADU regulations are
(03:47):
a little bit more lax and you're able to take advantage of them is that instead of acquiring
more rental properties, more real estate to actually build upon current rentals to maximize
their potential. And so the estimate that I got for the ADU, the new construction, it
was a conversion of a current garage. So a conversion is a good way to skirt some of
(04:11):
the ADU rules because you get kind of grandfathered in if you leave a certain percentage of the
old structure up and you build on it. And I believe it's a very small portion that needs
to remain like it can be a wall. And so with that, we were looking to have a garage and
a two bedroom, two bath ADU built and it involved like cutting down a tree and you know, it's
(04:36):
a little bit complicated, but it ended up the estimate was a little bit over $200,000,
which is no small amount of change. But if you're an investor, you're looking at rent
for something like that in that neighborhood to be around $2,000 or a little bit less.
(04:56):
And so you're really reaching that 1% rule. So the 1% rule says that you can get rent
that's 1% of the purchase price you're doing very well and that's exceedingly rare. I mean,
it's pretty much impossible in this area. You still find the 1% rule doable in the Midwest
and the South. But a lot of times that involves buying in an area that's not very good or
(05:20):
the condition of the house isn't that great. So it's a cost effective way if you can finance
it and put as little money as possible into the deal to make it cash flow or at least
be you know, cash flow neutral. So you're not having to pay anything else into it. The
renters are going to pay off the entire debt service of that ADU. I think that is a great
(05:42):
way for investors to move forward on properties that they already own and kind of squeeze
the juice out of that property. And I definitely looked into it. I haven't pulled the trigger
yet. It is pretty expensive. That's you know, over $200 a square foot easily. And so things
just aren't cheap. And so the construction of an ADU is going to be in that, you know,
(06:08):
we're talking about a stick built ADU is going to be, you know, in that 152 area, depending
on the square footage, you know, I find if you want something livable with enough square
footage to be fairly comfortable, it's going to be in that range. I think you could do
it a little bit cheaper if you were really looking to just like convert a garage into
(06:32):
a living space. I mean, you could do that, you know, for a lot less, but then, you know,
do people want to live in a 500, you know, or less 500 square foot or less garage. I'm
not sure. But so investors, multi generation and people with adult children with disabilities,
I see really benefiting from the ADU legislation in Vancouver, Washington. And so there are
(06:59):
urban ADUs and rural ADUs and they're a little bit different. So an urban ADU, you're going
to need permitting for all of this and you're going to need to comply with zoning. But if
you have a residential home in an urban setting or what's deemed an urban setting, you can
have an ADU as long as it is 1000 square feet or under, it needs to be 10 feet from the
(07:23):
primary residence. And that's why when I have people looking for properties and they're
interested in ADUs, I will direct them to look for properties where the primary home
is positioned either towards the back of the lot or the front of the lot or someplace,
usually the back or the front where you're going to be able to put an ADU without any
(07:44):
problems. Now, the garage that I had was like three feet from the property line. And with
an AD, if you're going to build it from scratch, it needs to be five feet from the property
line unless you're doing a conversion for a garage conversion. And then you can kind
of skirt that by being grandfathered in, which is great. And so if you can convert a structure
that's already there, like a garage, I think that's going to be your best bet because I
(08:08):
think the permitting is easier. And again, you're going to have some leniency with these
setbacks that are required for the AD. So, but you can also do it as a basement apartment.
So in that same house, ironically, I also have kind of a separate entrance, kind of
like a Jack and Jill entrance. So I do have a separate entrance into the basement. So if
I did want to put in an egress window, because that's going to be required to make it a bedroom.
(08:33):
And I wanted to plum in a bathroom in a kitchen. I could also make that an ADU. And so that
is another option for inside of a home. And that would be great for like a family member.
I'm not sure if I want to have, you know, just a renter coming up and down the stairs,
but maybe it's up to your comfort level. But the garage conversion or the basement apartment
(08:54):
is a pretty common ADU condition or qualification. All ADUs have to comply with zoning. And they
have to be connected to the city water and the sewer. Or in the case of a rural ADU,
they need to be connected to your septic. And so that's a requirement. In a rural ADU,
(09:18):
can be more than 1000 square feet. It could be 1500 square feet or 40% of the original
dwelling, up to 40% of the area of the primary dwelling's living area, whichever is less.
And I will have these regulations in the show notes so you can go and check them out for
yourself as well. So I mentioned that the setback needs to be 10 feet from primary,
(09:42):
five feet from the property line. The ADU cannot, square footage cannot exceed the square footage
of the primary dwelling. So you cannot build, you know, something and call it an ADU or have
an ADU that exceeds the square footage of a property. Building height is going to be 25 feet
high in an urban setting. And you are able to have an ADU without, without required to have
(10:09):
on site parking. If you have no on street parking, you may be required to have an extra spot for
somebody. But if there is on street parking, you do not have to provide a dedicated parking spot.
So that's really good. Structural guidelines for ADUs, they need to be in compliance with the
architectural and building materials structure of the current primary living area. So, you know,
(10:34):
you can't have something that doesn't fit in stylistically or doesn't use kind of similar
building materials. And again, these will be posted so you can check them out yourself. It says
you cannot establish an accessory dwelling unit if there are two or more single family
residences on a property. It haven't really encountered that too, too much. Usually you'll
(10:57):
have one primary dwelling unit and then like a single family home, and then you will have the
ADU adjacent to that or as part of it. And let's see a little bit of some extra stuff for parking
for rural ADUs. It says you are required to have an on site parking for a rural ADU, which makes
sense because you'll be out in the country and there's not a lot of streets. So you have to have
(11:21):
someplace for somebody to park if you have an ADU. There are impact fees associated with having
an ADU, but Clark County is providing incentives to waive 75% of these fees for people who apply
for ADU permits. The permitting, you know, not cheap. I got estimates to two to four grand plans
(11:44):
will also run you that much. Now there are some people that have their own in-house planners
and construction. And so there's a lot of companies out there that specialize in ADUs,
especially in Clark County. I'll have links to those too. And so you have a lot of options
when it comes to ADUs and I really see them taking off here. I think I've said that. I thought that
(12:06):
for a couple years now and I've seen in certain neighborhoods, especially high density, very
walkable neighborhoods, I've seen more ADUs. So, you know, Lincoln, Carter Park, how a rose village,
and then, you know, you see them less in northern suburban areas. And that's a lot of times as a
product of, you know, having smaller or having, you know, sometimes it's smaller lots or the way
(12:32):
the homes position. It's hard to put in an ADU. So positioning of the primary homes very important.
So I'm trying to think if I have anything else that I want to cover for ADUs. And I think that's
it. I don't want to over speak or simply just go over all of the requirements. I think that
(12:54):
generally covers them. Again, I'll have those linked in the show notes. Before I go, I did want to
mention some information about the Washington bond program. It is a program for first time homebuyers
and the definition of first time homebuyers can be pretty liberal. I recently had a client who
had been divorced and so she had bought a home with her ex-husband. But now that she was a single
(13:17):
mother, she was eligible again and received, you receive on average about 10 grand for down payment
assistance. So you need to have a minimum credit score of 620 for the Washington bond program and
a debt to income ratio that does not exceed 50%. And so Washington bond program is good for VA,
(13:37):
FHA and conventional loans. You have to go through a course, I believe. So there's like kind of a
class that you have to take to kind of educate yourself and to fulfill a requirement to be
eligible for the Washington bond program. So it's a good way to get some help for a down payment.
If you're wondering if your down payment is big enough or you're struggling to come up with a down
(13:58):
payment, this can really help. So it covers first time homeowners as I mentioned, single parents,
displaced homemakers and again, people who have owned a home with a spouse but are now looking
to buy a home on their own. So I think that's going to about do it for this week's episode. I hope I
brought some value in explaining kind of what an ADU is, who it might be for and some of the general
(14:24):
outlines for the requirements by the county to build an ADU. And I thank you for watching and
subscribing. If you've found any value with this, don't forget to like and subscribe. It does help
the channel and I will see you next time. Take care everybody.
Hello and welcome to the Spotlight Vancouver podcast. I am your host Doug Varenas, licensed
(00:07):
realtor in Oregon and Washington. And today we are talking about accessory dwelling units
or ADUs. We're going to talk about what they are, a little bit of the general regulations
of rural and urban ADUs and who an ADU might be right for. And stick around to the end.
I'm going to talk a little bit about the Washington bond program and how it's helping first time
(00:31):
home buyers with down payment assistance. But first, we're going to get into ADUs accessory
dwelling units. Now, I get a lot of questions about ADUs because people are beginning to
see the utility that they provide. Now, an accessory dwelling unit is sort of like an
independent apartment or living area that can be within a home or it can be detached
(00:55):
and adjacent to the home. And it usually includes its own bathroom, bedroom and kitchen. So it's
basically sort of like a mother-in-law apartment, mother-in-law suite. And there's a couple of
people that I think this is going to be really useful for. And part of those part of that
audience is going to be in that name, mother-in-law, or, you know, if you're looking for a multi
(01:18):
generational living situation where you have elderly parents that are going to be living
with you because they can no longer live without sort of having some extra help or an eye on
them, that can be a great solution for people. And I don't think we've begun to see that
quite as much. You're seeing a little bit more. And what I'm seeing is older parents
(01:40):
actually who are looking to live with their grown children in a multi generational setting,
and they're looking to pull their, pool their resources. So you're having usually the elderly
parents that have a little more money and they are buying a property and they don't
want to live necessarily in the same house or they want to have their own separate living
(02:00):
area while they're living with their children. And I think this is a great situation for
people because it, there's a lot of synergy there with the parents who might at some point
need some extra help living independently, but they don't want to go to like a facility.
And also for the children who may have trouble affording a home and also could benefit from
(02:24):
having grandparents nearby, you know, if and when they decide to have children. So I find
that that's what I'm seeing out there with ADUs is that it's for multi generational living
and it's really convenient for that. Another set of people who might benefit from an ADU
(02:44):
are parents that have adult children or soon to be adult children who have a disability,
who may need some extra help, but want to live quasi independently and the parents want
to keep them kind of nearby. Again, this can be pretty cost effective instead of having
a like day program or some facility where they're living in where they're not going
(03:05):
to be as independent or they're going to be further away. I think it's a great way to keep
those adult kids who may need some extra care close to you and give them the opportunity
to have a little more independence in their living situation. But those are the two main
I forgot one. Whoops. The other one are investors. Let's not forget about the investors out
(03:26):
there. I almost forgot. I and this applies to myself because recently I looked into having
an ADU built on a rental property that we own in Carter Park neighborhood, Vancouver,
so pretty dense neighborhood, very walkable neighborhood. And my thesis on real estate
investing has changed a little bit, especially in this area where the ADU regulations are
(03:47):
a little bit more lax and you're able to take advantage of them is that instead of acquiring
more rental properties, more real estate to actually build upon current rentals to maximize
their potential. And so the estimate that I got for the ADU, the new construction, it
was a conversion of a current garage. So a conversion is a good way to skirt some of
(04:11):
the ADU rules because you get kind of grandfathered in if you leave a certain percentage of the
old structure up and you build on it. And I believe it's a very small portion that needs
to remain like it can be a wall. And so with that, we were looking to have a garage and
a two bedroom, two bath ADU built and it involved like cutting down a tree and you know, it's
(04:36):
a little bit complicated, but it ended up the estimate was a little bit over $200,000,
which is no small amount of change. But if you're an investor, you're looking at rent
for something like that in that neighborhood to be around $2,000 or a little bit less.
(04:56):
And so you're really reaching that 1% rule. So the 1% rule says that you can get rent
that's 1% of the purchase price you're doing very well and that's exceedingly rare. I mean,
it's pretty much impossible in this area. You still find the 1% rule doable in the Midwest
and the South. But a lot of times that involves buying in an area that's not very good or
(05:20):
the condition of the house isn't that great. So it's a cost effective way if you can finance
it and put as little money as possible into the deal to make it cash flow or at least
be you know, cash flow neutral. So you're not having to pay anything else into it. The
renters are going to pay off the entire debt service of that ADU. I think that is a great
(05:42):
way for investors to move forward on properties that they already own and kind of squeeze
the juice out of that property. And I definitely looked into it. I haven't pulled the trigger
yet. It is pretty expensive. That's you know, over $200 a square foot easily. And so things
just aren't cheap. And so the construction of an ADU is going to be in that, you know,
(06:08):
we're talking about a stick built ADU is going to be, you know, in that 152 area, depending
on the square footage, you know, I find if you want something livable with enough square
footage to be fairly comfortable, it's going to be in that range. I think you could do
it a little bit cheaper if you were really looking to just like convert a garage into
(06:32):
a living space. I mean, you could do that, you know, for a lot less, but then, you know,
do people want to live in a 500, you know, or less 500 square foot or less garage. I'm
not sure. But so investors, multi generation and people with adult children with disabilities,
I see really benefiting from the ADU legislation in Vancouver, Washington. And so there are
(06:59):
urban ADUs and rural ADUs and they're a little bit different. So an urban ADU, you're going
to need permitting for all of this and you're going to need to comply with zoning. But if
you have a residential home in an urban setting or what's deemed an urban setting, you can
have an ADU as long as it is 1000 square feet or under, it needs to be 10 feet from the
(07:23):
primary residence. And that's why when I have people looking for properties and they're
interested in ADUs, I will direct them to look for properties where the primary home
is positioned either towards the back of the lot or the front of the lot or someplace,
usually the back or the front where you're going to be able to put an ADU without any
(07:44):
problems. Now, the garage that I had was like three feet from the property line. And with
an AD, if you're going to build it from scratch, it needs to be five feet from the property
line unless you're doing a conversion for a garage conversion. And then you can kind
of skirt that by being grandfathered in, which is great. And so if you can convert a structure
that's already there, like a garage, I think that's going to be your best bet because I
(08:08):
think the permitting is easier. And again, you're going to have some leniency with these
setbacks that are required for the AD. So, but you can also do it as a basement apartment.
So in that same house, ironically, I also have kind of a separate entrance, kind of
like a Jack and Jill entrance. So I do have a separate entrance into the basement. So if
I did want to put in an egress window, because that's going to be required to make it a bedroom.
(08:33):
And I wanted to plum in a bathroom in a kitchen. I could also make that an ADU. And so that
is another option for inside of a home. And that would be great for like a family member.
I'm not sure if I want to have, you know, just a renter coming up and down the stairs,
but maybe it's up to your comfort level. But the garage conversion or the basement apartment
(08:54):
is a pretty common ADU condition or qualification. All ADUs have to comply with zoning. And they
have to be connected to the city water and the sewer. Or in the case of a rural ADU,
they need to be connected to your septic. And so that's a requirement. In a rural ADU,
(09:18):
can be more than 1000 square feet. It could be 1500 square feet or 40% of the original
dwelling, up to 40% of the area of the primary dwelling's living area, whichever is less.
And I will have these regulations in the show notes so you can go and check them out for
yourself as well. So I mentioned that the setback needs to be 10 feet from primary,
(09:42):
five feet from the property line. The ADU cannot, square footage cannot exceed the square footage
of the primary dwelling. So you cannot build, you know, something and call it an ADU or have
an ADU that exceeds the square footage of a property. Building height is going to be 25 feet
high in an urban setting. And you are able to have an ADU without, without required to have
(10:09):
on site parking. If you have no on street parking, you may be required to have an extra spot for
somebody. But if there is on street parking, you do not have to provide a dedicated parking spot.
So that's really good. Structural guidelines for ADUs, they need to be in compliance with the
architectural and building materials structure of the current primary living area. So, you know,
(10:34):
you can't have something that doesn't fit in stylistically or doesn't use kind of similar
building materials. And again, these will be posted so you can check them out yourself. It says
you cannot establish an accessory dwelling unit if there are two or more single family
residences on a property. It haven't really encountered that too, too much. Usually you'll
(10:57):
have one primary dwelling unit and then like a single family home, and then you will have the
ADU adjacent to that or as part of it. And let's see a little bit of some extra stuff for parking
for rural ADUs. It says you are required to have an on site parking for a rural ADU, which makes
sense because you'll be out in the country and there's not a lot of streets. So you have to have
(11:21):
someplace for somebody to park if you have an ADU. There are impact fees associated with having
an ADU, but Clark County is providing incentives to waive 75% of these fees for people who apply
for ADU permits. The permitting, you know, not cheap. I got estimates to two to four grand plans
(11:44):
will also run you that much. Now there are some people that have their own in-house planners
and construction. And so there's a lot of companies out there that specialize in ADUs,
especially in Clark County. I'll have links to those too. And so you have a lot of options
when it comes to ADUs and I really see them taking off here. I think I've said that. I thought that
(12:06):
for a couple years now and I've seen in certain neighborhoods, especially high density, very
walkable neighborhoods, I've seen more ADUs. So, you know, Lincoln, Carter Park, how a rose village,
and then, you know, you see them less in northern suburban areas. And that's a lot of times as a
product of, you know, having smaller or having, you know, sometimes it's smaller lots or the way
(12:32):
the homes position. It's hard to put in an ADU. So positioning of the primary homes very important.
So I'm trying to think if I have anything else that I want to cover for ADUs. And I think that's
it. I don't want to over speak or simply just go over all of the requirements. I think that
(12:54):
generally covers them. Again, I'll have those linked in the show notes. Before I go, I did want to
mention some information about the Washington bond program. It is a program for first time homebuyers
and the definition of first time homebuyers can be pretty liberal. I recently had a client who
had been divorced and so she had bought a home with her ex-husband. But now that she was a single
(13:17):
mother, she was eligible again and received, you receive on average about 10 grand for down payment
assistance. So you need to have a minimum credit score of 620 for the Washington bond program and
a debt to income ratio that does not exceed 50%. And so Washington bond program is good for VA,
(13:37):
FHA and conventional loans. You have to go through a course, I believe. So there's like kind of a
class that you have to take to kind of educate yourself and to fulfill a requirement to be
eligible for the Washington bond program. So it's a good way to get some help for a down payment.
If you're wondering if your down payment is big enough or you're struggling to come up with a down
(13:58):
payment, this can really help. So it covers first time homeowners as I mentioned, single parents,
displaced homemakers and again, people who have owned a home with a spouse but are now looking
to buy a home on their own. So I think that's going to about do it for this week's episode. I hope I
brought some value in explaining kind of what an ADU is, who it might be for and some of the general
(14:24):
outlines for the requirements by the county to build an ADU. And I thank you for watching and
subscribing. If you've found any value with this, don't forget to like and subscribe. It does help
the channel and I will see you next time. Take care everybody.
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