Build an ADU or Buy a Home With One? Here’s What to Consider in Central Oregon

Greg Powell
Jul 24
3 min read

As housing costs rise and flexibility becomes a priority for many buyers in Central Oregon, ADUs (Accessory Dwelling Units) are more popular than ever. Whether you're dreaming of a guest cottage, a rental unit, or a place for family, the big question becomes:

Should you build your own ADU or buy a home that already has one?

Here’s a breakdown to help you decide:

🛠️ Option 1: Build Your Own ADU

✅ Pros:

Customize it to your exact needs—layout, finishes, purpose.
Add value to your property over time.
Build equity while possibly creating a rental income stream.
Multi-generational living or flexible work-from-home space.

❌ Cons:

High upfront cost — in Bend, costs range from $150,000 to $300,000+ depending on size and materials.
Permitting and design can take months.
May require upgrades to utilities, driveways, or parking.
Time-consuming: expect 6–12 months from planning to move-in.

🏷️ Good Fit For:

Homeowners who love their current location.
Those who have the capital or financing ready.
People wanting to maximize long-term value and control.

🏡 Option 2: Buy a Home With an Existing ADU

✅ Pros:

Immediate use—live in one unit and rent the other, or house family right away.
Simplified financing—one mortgage for both the home and the ADU.
Avoid construction hassles—no contractors, no delays.

❌ Cons:

Limited inventory—homes with ADUs in Central Oregon are in high demand.
May pay a premium price for the convenience.
Layout or design might not be exactly what you want.
Older ADUs may need renovation or code updates.

🏷️ Good Fit For:

First-time buyers wanting income potential.
Multigenerational families.
Investors or remote workers looking for instant flexibility.

🧮 Which One Is More Affordable?

It depends on:

The cost of land and building materials (which are rising).
Interest rates and whether you’re financing construction.
The purchase price of homes with ADUs (which tend to be higher, but often offset by rental potential).

A renovated home with an existing ADU may cost less in the short term. However, building your own ADU can lead to greater long-term equity, especially if you have space on your lot and time to plan.

📍In Central Oregon Right Now:

Bend, Redmond, and Sisters are seeing more ADU permits than ever.
New city zoning rules may soon allow more than one ADU per lot.
Investor and homeowner interest in properties with ADUs is rapidly growing.

Build if you’re patient, already own a property, and want to increase your home’s value and utility over time.Buy if you want to use an ADU right away and avoid the construction process.

Either way, ADUs are one of the smartest long-term plays in Central Oregon’s evolving housing market.

FAQs

Q: What’s an ADU exactly?

A: An ADU (Accessory Dwelling Unit) is a self-contained secondary living space on the same property as a main home. It can be a detached cottage, garage conversion, basement unit, or attached suite.

Q: How much does it cost to build an ADU in Central Oregon?

A: On average, expect to spend between $150,000 to $300,000+, depending on size, location, materials, and utility upgrades.

Q: Is it easier to get a mortgage for a home with an ADU already built?

A: Yes. Buying a home with an existing ADU typically means one mortgage and fewer upfront costs. Construction loans for new ADUs are more complex and may require larger down payments or equity.

Q: Can I rent out an ADU in Bend or Redmond?

A: Yes, both cities allow long-term rentals. However, short-term rentals (like Airbnb) often require special permits and are limited by local ordinances.

Q: Do homes with ADUs cost more?

A: Typically, yes. But they also offer immediate rental income, which can help offset the higher price over time.

Q: How long does it take to build an ADU?

A: From planning and permitting to completion, expect 6–12 months. Some prefab ADU models can be installed faster, but city permitting still takes time.

Q: Is building an ADU worth it for resale value?

A: In most cases, yes. An ADU can significantly increase property value—especially in high-demand areas like Bend, where housing inventory is tight.