More housing demand means searching for more opportunities and small spaces in urban areas to cram it in. This start up is monetizing that opportunity by putting ADUs in home owners yard, managing the rental of the ADUs and splitting revenue with them.
A wind through the back alleys of the Alberta Arts District reveals an eye-catching assortment of little buildings behind homes: a low-slung converted garage, a wooden A-frame on a hitch, a “tiny house” with second-story sundeck.
With about 70 percent of its metro area zoned for single-family housing, and some of the fastest-rising rents in the country, Portland has a paralyzing shortage of affordable housing that officials believe more accessory dwelling units (ADUs) could help address. City homeowners are embracing the idea: ADUs are popping up faster here than anywhere else in the U.S., with the city issuing building permits for about one unit per day in 2016.
But financing a full-fledged secondary housing unit is out of reach for many homeowners. A custom-built ADU (which is also sometimes called a granny flat or in-law unit) can easily set a Portlander back $150,000.
“That’s just not attainable for most people,” said Patrick Quinton, peeling back a thorny vine in an overgrown alleyway.
Quinton is the former executive director of the Portland Development Commission and the co-founder and CEO of Dweller, a startup aimed at helping more homeowners ride the wave of ADUs affordably. Dweller fronts the cost of purchasing and installing one-size-fits-all prefabricated ADUs in backyards. Third-party property managers rent out the unit to long-term tenants, and Dweller splits the revenues 30-70 with the homeowner, almost as if the company is leasing the land.
Homeowners have the option to buy out Dweller at any time, or purchase a turnkey ADU by themselves from the start, at a cost of $118,000 per unit. The leasing model is similar to how Solar City, the Elon Musk-acquired solar-panel startup, works—except probably with better potential for returns. In Portland, an ADU on the lot of a single-family house generally rents for $1,200 to $1,500 per month.
“There’s a natural market in these neighborhoods,” Quinton said. As high-end duplexes and triplexes pop up in areas like the arts district, the economics of housing in Portland are driving people to think about how to use their space more efficiently. While developers are accustomed to maximizing their square footage in dense downtown sites, “people haven’t traditionally thought of single-family plots that way,” he said. “Now we are.”
Long-term, the idea is to help Portland keep ratcheting up its rental supply so that housing costs level out. As in many other cities, new housing development slowed to a halt during the recession, and a lot of what’s gotten built since has been on the luxurious end of the scale. As new residents keep flocking to Portland, rent prices have ticked up sharply—12.4 percent from 2014 to 2015, the highest increase in the country at that time.Read More