Renting Out Your ADU: Short-Term vs. Long-Term Strategies (2025 Guide for Central Oregon Homeowners)

Accessory Dwelling Units (ADUs) are one of the smartest investments homeowners in Bend and Central Oregon can make right now. With rising housing demand and evolving ADU rules, these small secondary homes can serve as rental income generators, family spaces, or flexible living solutions.

If you’re planning to rent your ADU, one of the biggest decisions you’ll face is whether to go short-term (like Airbnb) or long-term (traditional tenant). Both have major pros and cons — especially with Central Oregon’s specific rental regulations.

Let’s break down how each strategy works, the rules you need to know, and which option best fits your goals in 2025.

Understanding ADU Rental Options in Bend and Deschutes County

In Oregon, ADUs can legally be used for either short-term or long-term rentals, but the details depend heavily on where your property is located.

• Inside the City of Bend: Most ADUs are allowed as long-term rentals (30+ days). Short-term rentals (STRs) may require a separate STR permit, and not all zones qualify.

• In unincorporated Deschutes County: ADUs are typically restricted to long-term use only, especially in rural zones due to state land-use laws.

• HOAs and private covenants: Some neighborhoods prohibit or limit short-term rentals altogether. Always check these first before you list your ADU.

Option 1: Long-Term ADU Rentals

A long-term rental means leasing your ADU for 30 days or more — often six months to a year.

💰 Pros

• Consistent income: Reliable monthly rent helps cover mortgage payments and utilities.

• Lower management stress: You won’t have to constantly find new guests or clean between stays.

• Tax benefits: You can deduct depreciation, maintenance, and other costs related to the rental.

• Easier financing approval: Lenders and insurers often prefer stable, long-term rental income.

⚠️ Cons

• Less flexibility: Once a tenant signs a lease, you can’t easily use the unit for guests or family.

• Wear and tear: A year-round tenant means more long-term use, so plan for maintenance.

• Rental caps: Bend and Deschutes County have occupancy and zoning limits to follow.

💡 Tip:

If your goal is steady, predictable income, long-term rentals are often the safest bet. They also tend to align more easily with ADU-friendly rules and financing programs.

Option 2: Short-Term ADU Rentals

Short-term rentals (STRs), like those on Airbnb or VRBO, can deliver higher returns — but come with more effort and regulation.

💰 Pros

• Higher income potential: Nightly rates often exceed long-term rent on a per-month basis.

• Flexibility: You can block off the ADU for friends, family, or personal use.

• Appeal to tourists: Bend’s year-round outdoor recreation scene keeps short-term demand strong.

⚠️ Cons

• Permit requirements: You’ll likely need an STR permit from the City of Bend. These can be limited depending on zoning.

• Higher upkeep: Frequent cleaning, guest turnover, and furnishing costs add up.

• Tax implications: STR income is taxed differently — often as self-employment or business income.

• Neighborhood sensitivity: Some areas restrict STRs to protect neighborhood character.

💡 Tip:

Short-term rentals make the most sense if your property is in a desirable location (near downtown Bend, Old Mill, or Mt. Bachelor access) and you’re comfortable managing guests or using a property manager.

Financial Comparison: What to Expect

Factor	Long-Term Rental	Short-Term Rental
Average Monthly Income (Bend 2025)	$1,400 – $2,200	$2,500 – $4,000 (variable)
Occupancy Rate	~95%	60–80% (seasonal)
Management Effort	Low	High
Regulatory Barriers	Few	Moderate to High
Tax Complexity	Low	Moderate/High
Flexibility of Use	Low	High
Risk Level	Low	Moderate/High

Bottom Line:If you want consistent, hands-off income, go long-term. If you prefer flexibility and potentially higher cash flow (and don’t mind a little hustle), short-term could pay off.

Legal & Regulatory Checklist (2025 Update)

Before renting out your ADU — in any capacity — make sure you:

1. Confirm zoning and permit requirements with the City of Bend or Deschutes County.

2. Obtain a business license if you plan to run an STR.

3. Meet building and safety standards (fire exits, parking, access).

4. Register for state lodging taxes if renting short-term.

5. Review your insurance policy to ensure coverage for rental use.

(For Bend homeowners, visit the City of Bend Short-Term Rental Program for current permit rules.)

Hybrid Approach: The Best of Both Worlds?

Some homeowners use a hybrid rental strategy — renting the ADU long-term most of the year, then switching to short-term during peak tourist months.

This can work well if you:

• Live on-site and can manage turnover efficiently.

• Have flexible tenants (such as traveling nurses or seasonal workers).

• Stay compliant with zoning limits and permit rules.

However, remember that switching rental types mid-year may require different tax reporting and licensing, so consult a professional before doing so.

Renting out your ADU in Central Oregon can be a powerful way to generate income, build equity, and make the most of your property.

If you’re inside Bend, you’ll enjoy more flexibility with both rental types — but stricter permit processes for short-term rentals. If you’re outside city limits, long-term rentals remain the safest and most compliant route.

Whichever path you choose, run the numbers carefully and stay current on local regulations — because in 2025, ADUs aren’t just accessory spaces; they’re one of the smartest housing investments you can make in Central Oregon.

FAQs

Q: Can I legally rent my ADU short-term in Bend?

A: Yes — but only in specific zones with an approved STR permit. Always confirm with the City of Bend before listing on Airbnb.

Q: Are ADUs in Deschutes County eligible for Airbnb?

A: Typically no. Most county ADUs are limited to long-term occupancy only, especially in rural residential zones.

Q: Do I need to report ADU rental income on my taxes?

A: Absolutely. Both short-term and long-term rental income must be reported, though deductions and tax treatment differ.

Q: What’s the best rental type for resale value?

A: Both increase value, but long-term rentals tend to attract more buyers due to their simplicity and compliance track record.