ADU Rentals In Tigard: Rules, Costs And Returns

Adding a rental-ready ADU in Tigard can create steady income, boost property value, and add flexible space for future needs. If you’re weighing the numbers, permits, and timelines, you’re not alone. Many Tigard owners want clear rules, realistic budgets, and a straight view of returns before they build or buy. This guide gives you the essentials so you can plan with confidence. Let’s dive in.

Tigard ADU rules at a glance

Tigard allows ADUs on residential lots under Oregon’s statewide framework. Under Oregon’s ADU statute, cities cannot require owner occupancy or off-street parking for qualifying ADUs. Tigard’s development code sets local, objective standards.

• Where allowed and how many: ADUs are allowed in Tigard’s residential zones, typically one detached ADU per lot. See Tigard’s ADU standards for details.
• Size and height: Detached ADUs are generally limited to 800 sq ft and 25 ft tall. Conversions can have different rules.
• Setbacks and coverage: Standard residential setbacks apply. Detached ADUs up to 15 ft tall may be allowed within 5 ft of the rear lot line.
• Parking: No new off-street parking is required under state law for qualifying ADUs. Confirm site specifics with the city.
• Permits: Expect planning review plus building and trade permits. Start with the Tigard Permit Center for submittals and inspections.

Fees and SDCs that shape your budget

System Development Charges (SDCs), permit fees, and utility costs can materially impact your project.

• SDCs: Tigard charges one-time SDCs for transportation, parks, water, sewer, and stormwater. Review the city’s System Development Charges overview and request a current estimate.
• Possible ADU SDC exemption: Tigard’s code offers an exemption in some cases if you record a 10-year no short‑term rental covenant. See the SDC exemption covenant language and confirm current availability with the City before relying on it.
• Other fees: Budget for building and plan review fees, water meter purchase or upsizing, and Clean Water Services sewer and storm SDCs. Ask the Permit Center for a site-specific fee estimate early.

What it costs to build in Tigard

Actual costs vary by type, site, and finishes. Recent Portland‑area ranges provide a useful frame.

• New detached ADU (about 400–800 sq ft): commonly $140,000 to $300,000+ based on national and regional summaries. See Portland‑area ADU cost ranges.
• Attached or addition ADU: often $120,000 to $250,000.
• Conversions: garage conversions are often $60,000 to $150,000. Basements can run higher depending on egress and structural scope. A local ADU cost breakdown shows many well-finished detached builds landing in the $200k–$350k range.

Major cost drivers include utility connections and upgrades, site prep and drainage, foundation type, design and permit costs, and your finish package. Get at least two Tigard-specific bids that reflect your lot conditions.

How long it takes

Plan your schedule from planning to keys-in-hand.

• Permitting: Clear-and-objective ADU submissions commonly take 2 to 4 months once plans are complete. Adjustments or discretionary reviews can add time. Use the Permit Center for current turnaround.
• Construction: Many detached ADUs build in about 2 to 4 months for straightforward sites. Complex conditions can extend to 6+ months. See typical ranges in typical ADU build timelines.
• End-to-end: A practical expectation is 6 to 12+ months from feasibility to occupancy.

Financing, taxes, and cash flow

You have multiple ways to fund an ADU, and new rules help lenders count ADU income.

• Loan options: Common paths include cash‑out refi, construction‑to‑perm, HELOC or second mortgage, and FHA 203(k) for eligible rehabs.
• Counting rental income: FHA updated guidance to allow lenders to use a portion of ADU rent for borrower qualification in certain scenarios. Review the FHA ADU income guidance and discuss specifics with your lender.
• Property taxes: In Washington County, new improvements typically increase real market value and assessed value within statutory limits. See how assessments work on the county’s property assessment page.

What you can rent it for

Rents depend on size, finishes, privacy, and location within Tigard. Recent market snapshots show small studios and one-bedroom ADUs often leasing in the $1,200 to $2,000+ per month range in Tigard, with variation across sources and seasons. Check current neighborhood comps for the most accurate figure and decide whether you will include utilities.

A simple returns example

Here is one way to think about the numbers. Adjust to your bids and rent comps.

• Build cost (all‑in): $220,000 for a detached 600 sq ft ADU.
• Rent: $1,700 per month. Gross annual rent: $20,400.
• Operating set‑aside: 30 percent for vacancy, maintenance, insurance, utilities you cover, and reserves ($6,120).
• Net operating income: $14,280. Cash‑on‑cost: about 6.5 percent before debt.
• Financing example: $175,000 at 6.5 percent, 30 years equals about $1,104 per month. That leaves roughly $1,032 per year before taxes and any additional owner costs in this scenario.

Interpretation: strong design and accurate budgeting can deliver positive or near break‑even cash flow, plus added property value. The key is pairing realistic build costs with current Tigard rents and the right financing.

Buyer and seller playbook

Use this quick checklist before you commit.

1. Confirm zoning, setbacks, and allowed ADU types for your parcel with the Tigard Permit Center.
2. Request an SDC estimate and ask about any ADU SDC exemption plus the 10‑year no‑STR covenant on the City’s System Development Charges overview.
3. Verify utility capacity and whether a new water meter, sewer connection, or electrical upgrade is required.
4. Get at least two local bids that reflect site constraints and current materials pricing. Use a detailed scope.
5. Model three rent cases: conservative, market, and stretch. Include SDCs, permit fees, insurance, management, vacancy, and reserves.
6. Decide whether an SDC waiver is worth the 10-year short‑term rental restriction. See the SDC exemption covenant language.
7. Call the county to understand tax impacts using the property assessment page.
8. If buying a home with an ADU, verify permits and final inspections. Unpermitted units carry legal and insurance risk.

Avoid common pitfalls

• Ignoring site conditions: slope, drainage, or a tricky sewer lateral can swing costs. Budget for unknowns.
• Underestimating fees: SDCs and meters are meaningful line items. Get written estimates from the City.
• Overbuilding: keep the program tight on small lots. Prioritize natural light, privacy, and storage for stronger rent.
• SDC waiver tradeoff: the no‑STR covenant limits flexibility for 10 years. Align with your long‑term plan first.

A well-planned Tigard ADU can be a durable income stream and a value add when you sell. If you want a second set of eyes on feasibility, pricing strategy, and how to position the finished asset in the market, connect with Rebecca Lee for boutique, broker-level guidance.

FAQs

Are ADUs allowed in Tigard for long-term rentals?

• Yes. Tigard allows ADUs under Oregon law, and they can be rented long term. Short‑term rentals may be restricted if you use an SDC waiver that requires a 10‑year covenant.

What size and height limits apply to Tigard ADUs?

• Detached ADUs are generally capped at 800 sq ft and 25 ft in height. Conversions may follow different standards per Tigard’s code.

Do Tigard ADUs need off-street parking?

• No additional off-street parking is required for qualifying ADUs under Oregon’s statute. Always confirm lot‑specific details with the City.

How will an ADU affect my Tigard property taxes?

• New improvements typically increase real market value and assessed value within Oregon’s rules, which can raise your property tax bill.

Can lenders count ADU rent when I qualify for a mortgage?

• In many cases, yes. FHA has guidance allowing a portion of ADU rent to be considered for borrower qualification, subject to program rules and lender underwriting.