Yes, you absolutely can rent out your ADU long-term in Oregon. And honestly, it’s one of the smartest reasons to build one.
So here’s everything you need to know about renting your Oregon ADU long-term, from the legal requirements to the money side of things.
The Short Answer: Yes, You Can Rent Your ADU Long-Term
Let’s clear this up right away. Oregon law not only allows ADU rentals but actually encourages them. The whole point of the state’s ADU laws was to create more rental housing.
What Counts as Long-Term Rental
Long-term rental means leasing your ADU for 30 days or more at a time. This is different from short-term rentals like Airbnb, which are daily or weekly bookings.
Most cities have separate rules for short-term rentals. But long-term rentals? Those are straightforward and widely permitted.
Oregon Actually Encourages ADU Rentals
Back in 2017, Oregon passed laws specifically designed to make ADU rentals easier. The state removed two big barriers that used to exist:
No owner-occupancy requirement. You don’t have to live on the property. You can build an ADU on a rental property you own, or you can rent out both your main house and your ADU.
No parking requirements. Cities can’t force you to add parking spaces when you build an ADU. This matters because parking requirements used to kill a lot of ADU projects.
These changes were intentional. Oregon wanted more rental housing, and ADUs are a proven way to add it without changing neighborhood character.
Understanding Oregon’s Landlord-Tenant Laws for ADU Rentals
When you rent out your ADU, you become a landlord. That means you’re subject to all the same laws as someone renting out a house or apartment.
Your ADU Rental Is Subject to Standard Landlord Laws
Oregon’s Residential Landlord and Tenant Act covers all residential rentals, including ADUs. This law spells out your rights and responsibilities as a landlord, plus your tenant’s rights.
Key things the law covers:
- Security deposits and how they’re handled
- Required notices and disclosures
- Maintenance and habitability standards
- Eviction procedures
- Rent increase rules
You’re not exempt from any of this just because you’re renting an ADU instead of a house. Same rules apply.
Oregon’s Statewide Rent Control Applies to ADUs
Oregon has statewide rent stabilization, and it applies to ADU rentals. Here’s how it works:
Senate Bill 608, passed in 2019, caps annual rent increases at 7% plus the Consumer Price Index (CPI), or 10%, whichever is lower.
For 2025, the maximum allowed increase is 10%. The Oregon Department of Administrative Services publishes this number every September.
But here’s the catch: rent control only applies to buildings over 15 years old. If your ADU is brand new, you’re exempt from rent control for the first 15 years. After that, you have to follow the annual increase limits.
A few other rent control rules:
- You can only raise rent once per 12-month period
- You need to give 90 days notice before any rent increase
- If you violate the rent control rules, you owe your tenant three months’ rent plus damages
Required Landlord Disclosures and Notices
Before a tenant moves in, Oregon law requires you to disclose certain things in writing:
- Smoking policy – whether smoking is allowed and where
- Shared utilities – if the tenant shares any utilities with you or the main house
- Flood zone status – if the property is in a flood zone
- Lead-based paint – required for any structure built before 1978
- Your contact information – so tenants know how to reach you for repairs
These disclosures aren’t optional. Missing them can create legal problems down the road.
Short-Term Rental Restrictions You Need to Know
While long-term rentals are encouraged, short-term rentals come with more restrictions.
The SDC Waiver Covenant
System Development Charges are fees that cities charge to cover infrastructure costs. For ADUs, these can run $10,000 to $20,000 depending on where you build.
Many cities, including Portland, offer to waive these fees if you agree not to use your ADU as a short-term rental for 10 years. You sign a covenant (a legal promise) that restricts short-term rental use.
If you take the SDC waiver and then try to Airbnb your unit, you’ll have to pay back the waived fees plus penalties. It’s not worth it.
Cities with Short-Term Rental Permits
Different Oregon cities have different approaches to short-term rentals:
Salem (where we’re based) prohibits short-term rental use of ADUs entirely. ADUs here must be rented for at least 30 days at a time.
Portland requires Type A or Type B short-term rental permits, and you have to live on the property at least 270 days per year to qualify.
Bend has a permit system with separation requirements between short-term rental properties.
Eugene allows short-term rentals but requires permits and compliance with additional regulations.
Most cities require special permits for rentals under 30 days, and many have strict limits on where and how you can operate them.
Why Most ADU Owners Choose Long-Term Rentals
After building ADUs across Oregon, we’ve noticed most owners go with long-term rentals. Here’s why:
It’s legally simpler. No special permits in most cities. No complex regulations to navigate.
The income is more stable. One tenant paying $1,500 per month is easier than managing different Airbnb guests every few days.
You qualify for incentives. SDC waivers and other city programs favor long-term rentals.
Less management headache. You’re not constantly cleaning, responding to booking inquiries, and dealing with guest issues.
Short-term rentals can make more money in certain markets, but the trade-off usually isn’t worth it for most ADU owners.
Setting Up Your ADU as a Long-Term Rental
Before you can legally rent your ADU, you need to complete a few steps.
Getting a Certificate of Occupancy
You can’t rent your ADU until you have a Certificate of Occupancy. This is the final sign-off from your city’s building department that the structure is safe to live in.
To get it, you need:
- Final inspection from the building department
- All electrical, plumbing, and mechanical systems approved
- Smoke detectors and carbon monoxide alarms installed
- Proper egress (emergency exits)
We handle this process for all our builds. It’s the last step before your ADU becomes a rental property.
Required Safety Features
Oregon requires specific safety features in all rental housing:
- Smoke detectors on every level and outside sleeping areas
- Carbon monoxide alarms if you have gas appliances or an attached garage
- Egress windows in bedrooms (specific size and opening requirements)
- Fire barriers between attached ADUs and the main house
- Accessibility features depending on when the ADU was built
These aren’t suggestions. They’re code requirements that get checked during inspections.
Landlord Licensing and Registration
Some Oregon cities require landlord licenses or rental registration:
Portland requires a landlord license for all rental properties. You apply through the city, pay an annual fee, and renew each year.
Eugene has a rental housing program with registration requirements and periodic inspections.
Salem doesn’t currently require a landlord license, but you still need to follow all state landlord-tenant laws.
Check your city’s requirements before you start renting. Operating without required licenses can result in fines.
Financial Considerations for ADU Rentals
Let’s talk money. Because that’s usually why people build rental ADUs in the first place.
Expected Rental Income in Oregon Markets
Rental rates vary across Oregon, but ADUs tend to command good rent relative to their size.
Portland area: Studio ADUs typically rent for $1,200 to $1,500 per month. One-bedroom units go for $1,500 to $2,000. Two-bedroom ADUs can hit $2,000 to $2,500 in desirable neighborhoods.
Salem area: Studio ADUs rent for about $900 to $1,200. One-bedroom units bring in $1,200 to $1,600. Two-bedroom ADUs rent for $1,400 to $1,800.
Eugene and Corvallis: Similar to Salem, with studio units at $1,000 to $1,300 and one-bedrooms at $1,300 to $1,700.
Rural areas: Expect lower rents, typically $800 to $1,200 depending on location and amenities.
These are ballpark numbers. Your actual rent depends on the ADU’s size, finish level, location, and market conditions.
Tax Implications
Rental income is taxable. You need to report it on your tax return, and you’ll pay income tax on the profit.
But you also get to deduct expenses:
- Mortgage interest (if you financed the ADU)
- Property taxes (the portion attributable to the ADU)
- Insurance
- Repairs and maintenance
- Utilities you pay for
- Depreciation (spread over 27.5 years)
The depreciation deduction is huge. You can depreciate the structure’s value (not the land) over 27.5 years, which significantly reduces your taxable income.
We’re not tax advisors, but we always tell clients to set up a meeting with a CPA before they start renting. The tax situation for rental properties is complex enough that professional advice pays for itself.
Insurance Requirements
Your homeowner’s insurance doesn’t cover rental activities. You need landlord insurance, which costs more but covers rental-specific risks.
Landlord insurance typically includes:
- Property damage coverage
- Liability protection if a tenant or guest gets injured
- Loss of rental income if the unit becomes uninhabitable
Expect to pay 15-25% more for landlord insurance compared to standard homeowner’s coverage. But it’s non-negotiable if you’re renting the unit.
Salem-Specific ADU Rental Rules
Since Pioneer ADU is based in Salem, let’s cover the local rules here.
Salem Prohibits Short-Term Rentals of ADUs
Salem is clear on this: ADUs cannot be used for short-term rentals. From the city’s official ADU page, “ADUs are intended to provide permanent housing whether rent is charged or not. Tenants who are renting must be renting for at least 30 days at a time.”
This means no Airbnb, no VRBO, no vacation rentals. The ADU must be someone’s actual residence.
Long-Term Rental Requirements
For long-term rentals in Salem:
- Minimum 30-day rental periods
- Must comply with Oregon’s landlord-tenant laws
- Need to follow Salem’s housing code for safety and habitability
- Should maintain the unit in good condition
Salem doesn’t require a landlord license, but you’re still responsible for following all state laws about security deposits, notices, repairs, and evictions.
Salem’s ADU Design Standards
Salem allows ADUs in most residential zones. The rules:
- Detached ADUs: up to 800 square feet
- Attached ADUs: up to 50% of the primary dwelling’s living area or 800 square feet, whichever is less
- Internal ADUs (basement or attic conversions): similar size limits
These size limits affect your rental income potential. An 800-square-foot ADU with one or two bedrooms is what most Salem landlords are working with.
Tenant Screening and Selection
Finding good tenants makes all the difference in your rental experience.
Fair Housing Laws Apply
You can’t discriminate based on protected classes. Federal law protects:
- Race
- Color
- National origin
- Religion
- Sex
- Familial status
- Disability
Oregon adds additional protected classes including:
- Sexual orientation
- Gender identity
- Source of income (like Section 8 vouchers)
- Domestic violence victim status
You need to treat all applicants equally. Use the same criteria for everyone, and document your screening process.
Application and Screening Process
A typical rental application includes:
- Credit check
- Criminal background check (with limitations in some cities)
- Rental history and references
- Income verification (most landlords look for monthly income at least 2.5 to 3 times the rent)
Oregon caps screening fees at $10 as of 2025. You can charge this once per applicant to cover the cost of running their credit and background checks.
Lease Agreements for ADUs
Always use a written lease. Oral agreements create problems and disputes.
Your lease should cover:
- Rent amount and due date
- Security deposit amount
- Lease term (month-to-month or fixed term)
- Who pays which utilities
- Maintenance responsibilities
- Parking arrangements
- Guest policies
- Pet policies (if you allow pets)
Oregon has specific rules about what you can and can’t include in a lease. For example, you can’t include a provision that waives the tenant’s rights under Oregon landlord-tenant law.
Managing Your ADU Rental
Being a landlord means ongoing responsibilities.
Maintenance Responsibilities
You’re required to keep the rental unit habitable. That means:
- Working plumbing, heating, and electrical systems
- Weatherproof and structurally sound building
- Clean and sanitary conditions
- Working smoke and carbon monoxide detectors
- Pest-free environment
If something breaks, you generally need to fix it within a reasonable time. “Reasonable” depends on the issue. A broken heater in winter? That’s urgent. A leaky faucet? You have more time.
Handling Repairs and Issues
Oregon law requires landlords to respond to repair requests promptly. For essential services (heat, water, electricity), you have very little time to fix problems.
You need to give 24 hours notice before entering the rental unit for non-emergency repairs. Even though it’s on your property, you can’t just walk in whenever you want.
Rent Collection and Late Fees
Rent is due on the date specified in your lease. Oregon requires a minimum 4-day grace period before you can charge late fees.
Late fees are capped by law. You can’t charge whatever you want. The fee needs to be reasonable and related to your actual costs.
If rent isn’t paid, you follow Oregon’s eviction process, which starts with proper written notice.
Eviction Rules for ADU Rentals
Oregon’s eviction laws are tenant-friendly. You need to know the rules.
Oregon’s “For Cause” Eviction Requirements
After a tenant’s first year, you can only evict for specific legal causes:
- Non-payment of rent
- Violation of the lease terms
- Illegal activity on the property
- Substantial damage to the property
- Certain other violations specified in state law
You can’t just decide you don’t like the tenant and kick them out. You need a valid legal reason and proper notice.
No-Cause Evictions Are Limited
Within the first year of tenancy, you can do a no-cause eviction with 30 days notice (60 days in Portland).
After the first year, no-cause evictions are only allowed if:
- You’re selling the property and the buyer wants to move in
- You or a family member wants to move into the unit
- You’re doing major renovations that require the unit to be vacant
- The property is being demolished
And there’s an important exception: if you live on the same property as your ADU tenant, you can use no-cause evictions at any time. This is one benefit of living on-site with your rental.
If you do a landlord-caused eviction after the first year, you’re required to pay relocation assistance. In most of Oregon, that’s one month’s rent. In Portland, the amount is higher and the rules are more complex.
Common Mistakes ADU Landlords Make
We’ve seen homeowners make these mistakes. Here’s how to avoid them.
Not Understanding Rent Control
Some landlords try to raise rent by whatever amount they want, not realizing Oregon has rent stabilization. Then they get hit with penalties.
Remember: after your ADU is 15 years old, you’re limited to 10% maximum annual increases (the exact percentage varies by year). And you can only raise rent once every 12 months with 90 days notice.
Skipping Required Inspections
Some people start renting their ADU before getting the Certificate of Occupancy. Bad idea.
If the city finds out, you’ll have to evict your tenant, get the inspections done properly, and potentially pay fines. And if something goes wrong and your tenant gets hurt, your insurance might not cover it because you were operating illegally.
Violating Short-Term Rental Covenants
If you took an SDC waiver and promised not to short-term rent, don’t try to sneak Airbnb bookings on the side. Cities check these listings, and the penalties for breaking your covenant are steep.
You’ll have to pay back the waived fees, possibly with interest and penalties. It can easily cost you $20,000 or more.
Benefits of Renting Your ADU Long-Term
Let’s look at why long-term ADU rentals make sense.
Steady Monthly Income
The financial math on ADU rentals usually works out well. If you can rent an 800-square-foot ADU in Salem for $1,400 per month, that’s $16,800 per year.
Most ADUs cost $150,000 to $250,000 to build, depending on size and finishes. If you’re getting $16,800 per year in rent and your expenses (property tax increase, insurance, maintenance) are around $4,000 per year, you’re netting about $12,800 annually.
That’s a 5-8% return on your investment before considering tax benefits from depreciation. And the ADU adds value to your property, so you also benefit when you eventually sell.
Addressing Oregon’s Housing Shortage
Oregon has a serious housing shortage. Every ADU helps.
By renting your ADU long-term, you’re adding stable, affordable housing to your community. That matters, especially in cities like Salem where rental vacancy rates are low and demand is high.
And the state recognizes this. That’s why cities offer incentives like SDC waivers for long-term rental ADUs.
Flexibility for Future Use
Here’s something people don’t always think about: you can change how you use your ADU later.
Maybe you rent it out for five years, then your parents need a place to live. Or your adult kid moves back home. Or you decide to move into the ADU and rent out the main house.
ADUs give you options. You’re not locked into one use forever.
How Pioneer ADU Supports Rental ADU Projects
At Pioneer ADU, we build a lot of rental units. We know what works.
Building with Renters in Mind
When we design ADUs that will be rented, we focus on:
Durable finishes. Rental units take more wear and tear than owner-occupied spaces. We use materials that hold up over time.
Separate utilities. Separate electric and gas meters make it easy to bill tenants for their usage. Water can be trickier, but we help you figure out the best approach.
Sound insulation. If you’re living on the same property, you want good sound insulation between the ADU and your main house. We build to higher standards than code requires.
Functional layouts. Renters want practical spaces. We design ADUs that use every square foot efficiently.
Understanding Local Rental Markets
We’re based in Salem, and we’ve built ADUs throughout the Willamette Valley and beyond. We understand what renters in different areas expect and what features add rental value.
For example, in Salem, renters care a lot about parking even though it’s not legally required. So we try to include it when possible because it makes the unit easier to rent.
In Portland’s inner neighborhoods, walkability matters more than parking. Design decisions change based on location.
Certificate of Occupancy Process
We handle the final inspection process and make sure your ADU passes on the first try. By the time we turn over the keys, you’re ready to start showing the unit to prospective tenants.
That matters because every month of delay is a month without rental income.
FAQ
Do I have to live on the property to rent out my ADU?
No. Oregon law removed owner-occupancy requirements for ADUs. You can own the property, rent out both the main house and the ADU, and live somewhere else entirely. This makes ADUs viable as pure investment properties.
How much can I charge for rent on my ADU?
It depends on your location, the ADU’s size and quality, and market conditions. In Salem, expect $900 to $1,600 per month for most ADUs. Portland ADUs typically rent for $1,200 to $2,000 per month. You can research comparable rentals in your area to set competitive rates.
Can I rent my ADU on Airbnb?
It depends on where you live and whether you took any incentives. Salem prohibits short-term rental use of ADUs entirely. Portland allows it with permits if you live on-site most of the year. And if you took an SDC waiver anywhere in Oregon, you’re restricted from short-term rentals for 10 years.
Do I need a separate utility meter for my ADU rental?
It’s not legally required, but it makes life much easier. With separate meters, tenants pay their own electric and gas bills directly to the utility company. Without separate meters, you either need to estimate usage and charge the tenant, or you include utilities in the rent. Both approaches create complications.
What if my tenant doesn’t pay rent?
You follow Oregon’s eviction process for non-payment. You serve a 72-hour notice (in most cases) giving the tenant three days to pay or move out. If they don’t do either, you file for eviction in court. Oregon’s process is specific and technical, so many landlords hire attorneys to handle evictions.
Can I evict a tenant if I need the ADU for family?
After the first year of tenancy, yes, but only under specific conditions. If you or an immediate family member wants to move in, that’s a valid reason for eviction. You need to give proper notice (typically 90 days) and pay relocation assistance in most cases. If you live on the property with the tenant, you have more flexibility.
Do ADU rentals qualify for any tax benefits?
Yes, several. You can deduct operating expenses like maintenance, repairs, insurance, and property taxes. You can depreciate the structure over 27.5 years, which is a substantial deduction. Mortgage interest on loans used to build the ADU is also deductible. These benefits significantly reduce the taxable income from your rental.
How long does it take to find a tenant for an ADU?
In most Oregon markets, good ADUs rent quickly. In Salem, we typically see units rent within 2-4 weeks of being listed. Portland can be even faster if the unit is priced right and in a good location. Rural areas might take longer, sometimes 4-8 weeks. Much depends on the rental market when you’re listing.
Making Long-Term ADU Rentals Work in Oregon
Renting your ADU long-term in Oregon is not only legal but encouraged. The state has created a framework that makes it relatively straightforward compared to many other states.
You need to follow landlord-tenant laws, understand rent control if your ADU is over 15 years old, and make sure you have the right insurance and business setup. But none of that is particularly complicated if you approach it systematically.
The financial benefits are real. A well-managed ADU rental can generate meaningful income, help pay your mortgage, and add value to your property. And you’re helping address Oregon’s housing shortage at the same time.
At Pioneer ADU, we build rental-ready ADUs across Oregon. We understand the local regulations, we know what makes a good rental unit, and we can help you navigate the process from design through your first tenant.
If you’re considering building an ADU to rent out, contact us for a consultation. We’ll help you figure out if a rental ADU makes sense for your property and your financial goals.