Adu and long term or no adu and short term

[Andrew Etzweiler]

We’re about to move into a 3 bed 2 bath house in White Salmon WA. We’re mainly considering two different strategies:

1.) build a detached ADU. Rent it out long term (60 days or more). Live in the house. Rent the house long term when we move out in a year or two.

2.) section off 2 bedrooms plus 1 bathroom of the main house (separate entrance) and rent out short term. Then rent out the rest of the house short term when we move out in a year or two.

building an ADU triggers a "no short term rental on the property" clause. So, ADU + short term rental isn't an option.

Which one would you go with for maximizing net operating income?

[James Dainard]

Quote from @Andrew Etzweiler:

We’re about to move into a 3 bed 2 bath house in White Salmon WA. We’re mainly considering two different strategies:

1.) build a detached ADU. Rent it out long term (60 days or more). Live in the house. Rent the house long term when we move out in a year or two.

2.) section off 2 bedrooms plus 1 bathroom of the main house (separate entrance) and rent out short term. Then rent out the rest of the house short term when we move out in a year or two.

building an ADU triggers a "no short term rental on the property" clause. So, ADU + short term rental isn't an option.

Which one would you go with for maximizing net operating income?

 Hey Andrew,

Sounds like the second option is going to be better for you in the long run unless you know that you'll have the demand to support the additional structure on longer-term leases.

If you know your renter pool will take to the ADU then it'd be worth it to run a cost analysis on building the structure to see what your return on that would be versus the return on renovating the existing house into two units.

The renovation is probably going to be cheaper for you and will give you the option to put a longer-term tenant in place who can help you manage your STR once you move. If you have have managers and cleaners in place already then you'll have two units like you wanted!

Hope that helps!