After A Week Long Send Off, My Round the World Trip kicked off with eight days in Maui visiting my sister Sarah who has split her time between Hawaii and Alaska for many years. What an epic way to start this adventure! There was mist falling when my sister greeted me at the Kahului airport on Maui a week ago, so she teased me about bringing the rain from the mainland. We headed straight for Paia where she presented me with a young coconut and a lei, accompanied by the chant for the gifting-of-a-lei.
A number of circumstances collided recently to compel me to move the Lucky Penny to my property in Walla Walla where I have a ground bound small house called Valencia Cottage. So on Tuesday trusted tiny house movers Linh and Stephanie Pham helped me move the Lucky Penny safely from Portland to my place in Walla Walla.
As I packed up recently in preparation to travel cross country in my Honda Fit, I did some downsizing… It was harder than it had been during my last couple of moves because this time I had more stuff. I’d been living in a bigger space…My apartment was a studio, but it was still about 6 times bigger than the Lucky Penny! I talked with several people about the experience and a handful of them said “oh my goodness, I need to do more of that!” So I’ve decided to offer a 6-week Downsizing Tune Up…
his past weekend I had the opportunity to teach two sessions of the Tiny House Collaborative Tiny House Community & Zoning Workshop at Earth Day Texas (EDTx) in Dallas, Texas. Lee and I co-taught since BA was the coordinator for the tiny house village at the event.
Christian Parsons of Tiny House Expedition snapped this shot of the Tiny House Conference.
The past few weeks have been a whirlwind of tiny house events on both coasts! Four weeks ago today I was headed to the East Coast for Tiny House 101 in DC. Three weeks ago today I was on my way to Vermont to teach Tiny House Design-Build at Yestermorrow. During the 2-week course we constructed the shell of a tiny house on wheels for a fellow named Nick who, at 26 years old, is super clever about establishing housing stability and flexibility. I wish I had been so wise at that age! During the evenings we had studio time to explore tiny house design considerations and students worked on creating their own tiny house designs. If you'd like a sense of the day-by-day flow of this course, you can check out previous posts about Tiny House Design-Build.
We wrapped up there a week ago tomorrow and I flew across the country again to be back home in time to speak at the Tiny House Conference, which was in Portland this year. I've been at all four of the Tiny House Conferences now and it's neat how it alternates between the East Coast and the West Coast. I spoke about Tiny House Community on Saturday and then facilitated the Open Space session on Sunday. During the rest of the time I joined Track C, a new addition to the Conference this year for those of us who are already living or building tiny. It was fun to have conversations about the future of the movement and to swap stories of our biggest mistakes! The Conference is always a great opportunity to connect with fascinating folks from all over the place and I look forward to hearing updates about people's tiny house journeys!
On Monday BA Norrgard and I led a Tiny House Community & Zoning Workshop through the Tiny House Collaborative. We explored various tiny house community models, discussed zoning challenges and opportunities, and laid out some steps (and tips) for creating tiny house community. We were fortunate to have an awesome venue at the Cully Grove Common House so we were able to talk about creating community in the community living room of a very cool community! We also had some special guests join us, including Alexis Deharts Stephens of Tiny House Expedition who (along with her partner Christian) has probably visited every tiny house community in the country! We also had a panel discussion with four community members from two different tiny cohousing communities in Portland. Thanks again, Tony, Karin, Lori and Kyra! It was fun to show people our tiny house community and to have Pam Westra show off three of the tinies at Tiny Digs, Portland's other tiny house hotel. (I've written about Caravan - The Tiny House Hotel in the past and I love that tiny houses are so popular in Portland that we now have TWO tiny house hotels!)
On Tuesday I attended the Build Small Coalition meeting, which is a reconvened group previously dubbed the Space-Efficient Housing Working Group. This is Portland's collection of professionals working to support tiny houses, ADUs, micro apartments, and other space-efficient creative housing solutions. It was great to see familiar faces and hear their updates as well as meeting new folks who are taking on neat projects. I look forward to seeing what we accomplish this coming year! I have a hunch it's going to be another big year for small homes!
If you've been fantasizing about a small space of your own (whether that's a backyard cottage, a converted vehicle, or a tiny house on wheels), this course is a brilliant way to dig deep and have a great time exploring the possibilities. I hope you can join us! Please share with other small space enthusiasts who might be interested, too. The more, the merrier!
A week ago today my fiance Isha and I got the keys to our new home and we're eager to tell you all about it! We had this vision in mind but we didn't expect that we'd manifest it so quickly! A couple months ago Isha spotted a property that seemed to meet our criteria. It was a beautifully renovated 1920s home with the possibility of creating a functional ADU, a fenced yard with garden beds, and we already knew some of the neighbors. So we checked it out, decided it would be an awesome fit, and placed an offer. Everything came together so quickly we were afraid to jinx it. Indeed at a few points we didn't think it was going to work out, so we were keeping it on the down-low. But it did work out in the end.
Yesterday, on a gorgeous spring morning, my landie Jake and I rode our bikes down to the Native American Center at PSU to attend the Small Scale Developer Bootcamp hosted by Eli Spevak of Orange Splot, LLC and John and Jim from Incremental Development Alliance. These three incredible people teamed up after meeting at an event last year. Eli told Jim and John that Portland has lots of people eager to make our neighborhoods better places through creative, community-oriented small scale projects. They scheduled a one-day bootcamp for the summer of 2016. But as more and more people contacted Eli with questions over the winter, he realized the demand for this information was even greater than anticipated, so he convinced John and Jim to bump the training up. They agreed and had the opportunity to present to a sold-out crowd of more than 100 people yesterday!
The event actually kicked off on Tuesday evening with a set of presentations by small scale developers at The Zipper, a fun new food court with local independent restaurants created by Kevin Kavanaugh of Guerrilla Development. It was fascinating hearing about all the small-scale residential, live-work, incubator, and mixed-use spaces that have been created. A special focus of the bootcamp was missing middle housing, a term coined by Daniel Parolek to describe the mid-density housing that most American cities quit building many years ago and now sorely lack. Daniel was there for the bootcamp to describe missing middle housing - you know, like fourplexes, garden apartments, rowhomes - and its role in our urban fabric.
Yesterday the ten sessions included topics like:
It was heartening to see so many people in Portland eager to learn about how they can play a part in making better neighborhoods by filling the gaps in our urban fabric with missing middle housing and small mixed-use projects. It was also fun to recognize so many faces in the room and meet new people. I'm glad I was able to participate and I look forward to seeing what happens in Portland over the next couple years as a result of the Small Developer Bootcamp!
It was great fun Kicking Off 2016 with Small Home Design by teaching Less Is More at Yestermorrow. Monday and Tuesday we went on field trips to small houses in the Mad River Valley and Montpelier. We got to see five little houses this year, ranging in size from about 120 square feet to 1700 square feet. All five of these houses were owner-built, which was neat because we had the opportunity to talk to the homeowners about their challenges and successes. I had been to each of these small homes before, but I learn something new each time I visit, so that was great!
On Monday, Tuesday, and Wednesday Dave and I presented slideshows to share building basics and design tricks for small spaces. We asked the students what else they wanted to learn and ended up doing a crash course in building science, a presentation on toilet options, considerations for construction and finish materials, and sharing net zero energy information. We also introduced design exercises and drafting techniques.
One of our activities was designing a tiny house together by taping it out on the floor. I was impressed by how many different considerations came up as the students deliberated the merits of putting the door in one location or another and selecting a roof style. They were excellent at weighing their options and thinking things through. It was fun to see students design exercises morph into their individual projects as their understanding and design skills evolved. (Photos forthcoming.)
On Thursday the students worked away the day designing their own small home projects, ranging in scale from a 200 SF tiny house on wheels to a 1800 ski house that can sleep 12. They presented their work on Friday to the class and our jurors, Paul Hanke and Kathy Meyer.
Other projects included:
It was fun to see students design exercises morph into their individual projects as their understanding and design skills evolved. And, of course, it was great to be back in Vermont and at Yestermorrow. This was my eleventh trip out there and it looks like I may have good reason to go back again this summer to help out with a Build Blitz. One of the students in the class is excited to build a tiny house on wheels and several other students are eager to help out. Stay tuned for more about that possibility!
Meanwhile, I’m scheming my next tiny house design workshop, which will be in Asheville, NC right after the Tiny House Conference. If you’re noodling through your tiny house design, mark your calendar for April 3-8th and Contact Me to be added to the list for more information!
As you can see from the ADU Case Studies, many homeowners recognize the social, environmental, and financial value of creating an ADU on their property. However, our financial system hasn’t quite caught up with the trend. As I talked with more than 80 ADU owners and professionals for the ADU Case Studies Project, I came to learn that there’s a triple whammy when it comes to ADU financials.
Here’s how it works:
#1 – You try to get a loan to build an ADU but the bank is wary, so you have to scrounge up at least part of the money some other way.
#2 – You build your ADU and it does indeed add value to your property (yay!) which means your taxes go up (maybe a lot!)
#3 – You are ready to sell your house with an ADU and you’ve accepted an offer but the appraiser isn’t familiar with ADUs and values your property at way less than the market rate.
Let’s break it down. Here’s what the worst case scenario might look like:
You’ve read up on How to Buy or Sell a Property with An ADU (or ADU Potential). You’ve found a great property and you’ve built your team of ADU Professionals. You’re ready to start building that ADU of your dreams, so you go to the bank.
#1 – Getting Financing
“Everyone agreed ADUs were a great idea, but none of the banking industries got on board for years. We were abandoned by financing. Banks are always fair-weather friends.” –Sam Hagerman
The bank is wary to loan on a project that doesn’t have good collateral. They might say ‘You’re just talking about finishing out the basement, right? Why is it going to cost $100,000?’ So it’s tricky for you to get a construction loan. After all, you’re not a known quantity. Sure, you’re good about paying your bills each month, but you’re not a developer. You’ve never built a house before so you don’t have a track record. How are they to know that you’ll be able to pull it off and that this ADU will really add value to your house? If you’re not able to get a loan for the full amount you need to construct your ADU, you’ll need to scrounge it up from somewhere else.
You might try one of these options:
Before you get too far along in your ADU dream, be sure you have a good plan to fund it! Before you buy a property with an ADU (or ADU potential), be sure the appraiser and loan officer have A Practitioner’s Guide to Appraising ADUs. Also make sure you and your realtor have reviewed How to Buy or Sell a Property with an ADU.
#2 – Paying Property Taxes
Even though the bank wasn’t sure your garage conversion would add value to your property, now you’ve added a new dwelling to your property and the value has indeed gone up. You might be able to have your property reappraised. And when you do you might find that it’s gone up quite a bit as Caleb & Tori Bruce and Bob & Adrienne Stacey did. At this point you might want to turn to your bank and say, “See, toldja so!” You might decide to refinance.
But then the tax assessors come by and it turns out they like what you’ve done with the place, too. So your property taxes go up. Even before Multonomah County’s Re-MAV, ADU owners such as Jane Doe were shocked by the increase in their property tax bills.
Before you build an ADU, be sure you understand the tax implications of creating a dwelling on your property, particularly if it’s detached and you live in Multnomah County where we have a wacky property tax system and a recent regulatory change that has tripled some people's taxes overnight.
#3 – Selling Your Home with An ADU
You wrestled with the bank to get money to build your ADU and you paid the tax collector for all the years you owned your ADU. But you also made decent money renting your place out for the past 10 years. (After all, there are Options for ADU Owners: Rent One, Both, or Neither). Or maybe it was where your dad lived for his last decade. (And you've learned that ADUs Work for Multigenerational Families and discovered the hidden value of ADUs.) So it penciled out after all.
Now you’ve got a great opportunity somewhere else and you’ve decided you’re not going to Own Two, Rent Both or Own Two, Rent One. So it’s time to sell your place. You’ve got a great sellers agent and you've accepted a great market-rate offer.
The trouble is that the appraisal just came in and it’s way lower than you expected. It may be that the buyer's appraiser doesn’t recognize the value of your ADU. Since ADUs are illegal in many places, appraisers (especially from the big banks) may turn a blind eye and pretend they’re not there at all. Or she may still be using the comps method of evaluating the property. She might have evaluated your 2 bedroom, 1 bath house and 1 bedroom, 1 bath ADU and considered it a 3 bedroom, 2 bath house rather than 2 separate units. She compared that to other 3 bedroom houses in the neighborhood instead of calculating the rental income potential using the valuation method. (The valuation method is used for apartment buildings and other income-generating properties and it’s preferred over the comp method for evaluating ADUs.) So now you're having trouble selling your place because your buyers aren't able to get their bank to finance your property with an ADU. You don't want to take the appraised value, but your buyers can't afford to pay cash.
What a mess! So THAT is what I have come to call the Triple Whammy of ADU Financials.
So why in the world might it make sense to build an ADU anyway?
The triple whammy described above is the worst-case scenario. If that was everyone’s experience there would probably be a lot fewer ADUs. However:
The financial industry is catching up with the trend, so it’s getting easier to get financing through a home equity line of credit, particularly with credit unions and community banks. So you may be able to finance your ADU with a home equity line of credit (HELOC) as Don Golden & Edith Casterline, Heidi Rose, Lesa Dixon-Gray, Joan Grimm & Rita Haberman, Kathleen Pequeno, Dennis & Stephanie Martin, John Baker, Michael Klepinger, Stephen Williams, Susan Moray did. However, you’ll learn as Susan Eliot did, that you need to live in your home for a while before you’ve built up enough equity to take some out for the ADU.
“ADU financing has only really become a reality because of economic change. Land prices have gone back up. There’s the advent of Airbnb. The writing on the wall is finally defined enough for the bankers to pay attention. If you build an ADU you can potentially raise the value by far more than the mortgage. When they know it will make sense, they’ll pour money into it.” –Sam Hagerman
In Portland you can take advantage of the waiver of System Development Charges. Additionally, Portland’s Accessory Structures Zoning Code Update Passed, which will potentially reduce costs associated with making your detached structure match the primary dwelling (such as matching the cedar shingles!)
More appraisers are becoming familiar with appraisal methods that take income potential into account. Before you buy or sell a property with an ADU, be sure the appraiser has A Practitioner’s Guide to Appraising ADUs. Also make sure you and your realtor have reviewed How to Buy or Sell a Property with an ADU.
Meanwhile, in many cities market rate rents continue to hold strong and in some cities they’re increasing, so there are Options for ADU Owners: Rent One, Both, or Neither. Furthermore, ADUs Work for Multigenerational Families by providing both economic and emotional returns on investment.
So the best way to avoid the triple whammy of ADU financials is to do your due diligence and be well-educated about the financial implications of your decisions. Make a wise and informed decision that fits your lifestyle and current situation as well as your future plans.
Good luck!
As you read through the ADU Case Studies on AccessoryDwellings.org, it may seem like ALL the ADUs in America are centered in the immediate vicinity of Voodoo Donuts. I’m here to assure you that’s not true. It’s really not about the donuts. It’s about the food carts, the craft beer, and the dream of the 1890s.
But in seriousness, there are indeed lots of ADUs in Portland, OR and several good reasons that Portland has become the epicenter of the small housing universe. There are also a couple reasons that Portland is over-represented on AccessoryDwellings.org. I’ll explain these in a moment.
But first, I want to make sure you know the ADUs are NOT all in Portland. Really. There are legal, permitted ADUs in cities all over the country. (And lots more practical ADUs that aren’t permitted, but that’s a different story.) Even within the ADU Case Studies Project, which is focused on ADUs in Oregon, there are several ADUs in Eugene, OR (see Bob & Jenny Harris, Robert Albano, Dennis & Stephanie Martin, and Caleb & Tori Bruce) and Ashland, OR (see Cheryl & Jim Levie and Dan Gray. We will continue to add information about ADUs to AccessoryDwellings.org so that over time it will be clear that the ADUs are not all in Portland.
So here’s why it seems like ALL the ADUs are in Portland:
Meanwhile, please look at the ADU Case Studies as a set of examples for how you, too, could create an awesome ADU. Even if the ADU regulations are different where you live, and even if it's not practical to bring a Portland-based ADU Professional on board for your project, there are great ideas here you can borrow. The ADU Case Studies Project includes all sorts of interesting information from how people created clever storage solutions to how to buy or sell a property with an ADU. So please enjoy exploring and share your ADU with us once it's built!
What an action-packed weekend it was for little houses!
On Friday I enjoyed visiting with other small home advocates and enthusiasts from all across the country at the Build Small, Live Large Summit. Alan Durning of the Sightline Institute and Dee Williams of Portland Alternative Dwellings laid the scene perfectly in their Keynote Address: The Power of Small. I especially appreciated that Alan’s point that small housing is so often illegal and his encouragement to think really BIG about how we can move forward housing options that are better for people, communities, and natural environments. It was hard to pick between the concurrent sessions, but I’m glad I went to the one about demographic shifts and housing trends because it was really interesting learning about how certain trends (towards smaller households, larger homes, longer lives, delayed marriage and childbearing, increased desire for walkability, etc.) are impacting housing choices.
The five panelists for the Space-Efficient Housing Policy Round Table (Eli Spevak, Jean-Pierre Veillet, Danell Norby, Liz Getty, and Rachel Ginis) did an excellent job describing the regulatory challenges they face in their daily work as they attempt to create small homes. They also presented clever solutions to address or work around these challenges and we left the audience with Tangible Ways You Can Support Space-Efficient Housing.
The Courtyard Clusters session with my heroes Ross Chapin, Mark Lakeman, and Eli Spevak was full of incredible ideas and images. I tried frantically (and failed miserably) to capture the poetry of how smart land use creates sustainable community. I also learned new words like “pre-legal” which I have already begun employing. (Thanks, Mark!)
The Best of Small Design Slam was fabulous, too. As he was ducking out at the end of Mark Lakeman’s presentation, Mayor Charlie Hales leaned over to me and said: “I know a vacancy coming up soon and that guy would be a good candidate to fill it!” I completely agree, Mayor Hales.
On Saturday Eli and I both lead Guided ADU Tours with 14 participants, showing them a great line-up of accessory dwellings. Many of the people in my group are considering creating an ADU on their own property so they had lots of questions about the ins and outs of the upcoming Accessory Structures Zoning Code Amendments and the impacts of Multnomah County’s new method for assessing property values on properties with detached ADUs. It poured down rain all day, so we ended up soaked, but morale remained high as we went to as many ADUs as we could fit in.
That evening we celebrated Simply Home Community’s 1 Year Anniversary with a party at our place. It’s always fun to get our friends together to mix and mingle. We hosted little parties in our tiny houses (at one point I had 17 people in The Lucky Penny!) as well as activities in the Big House. And, of course, we had singing and s’mores around the bonfire to wrap up the night.
Yesterday during our Simply Home Work Party we donned our rain coats and put our garden to bed. (Amazing how much we can get done quickly when working together!) Then Jake, Isha and I hunkered down at Bison Coffeehouse in the rainstorm to work through our Tiny House Considerations Lesson & Challenge for Week 2. (Since I've fallen in love with The Guy Next Door, I'm going through the same process of scheming a tiny house as the other participants in the E-Course!) We had a great conference call for Week 2 of the Tiny House Considerations E-Course and I look forward to sharing the Lesson and Challenge for Week 3 because it’s full of fun design exercises so participants can consider what’s most important to them. The bell rang for Community Dinner just as the conference call wrapped up, so we trooped inside for one of Lindsey’s fabulous meals. Our Heart Meeting after supper focused on capturing our Values in preparation for upcoming conversations about Vision and Mission.
If my weekends are going to be so full, I'm glad that they're full of great things and wonderful people! With a good breakfast in my belly (fried green tomatoes from yesterday’s garden harvest) I’m ready for a brand new week! Happy Monday, everyone!
