Garage Conversion

Industrial garage conversion

This area of the City has many narrow lots of record, and this property allowed for subdivision and construction of two new tall, skinny houses (in fact, that’s just what the neighbors did!) Rather than split the lot we decided to convert the existing garage into a second rental unit and preserve the original home. Our goals were to modify the original envelope as little as possible; to design and build a structure that would complement (but not imitate) the existing home; and to ensure a strong return on our investment while still meeting the City’s Affordable Housing Standard.





As a future long-term rental, cost and durability were primary concerns. Using creative construction solutions we were able to keep the existing roof and re-use the existing framing and foundations, saving a lot of money and diverting waste from the landfill. By exposing and staining the concrete floor we got a high-durability finish at minimal cost. The money saved on inexpensive industrial lighting allowed us to outfit all the fixtures with dimmable LED bulbs and to buy extra insulation — this project has 70% more insulation than required by the Energy Code. The skylights not only add to the beauty of the space, but they cut down on the need for interior lighting, and were spaced to facilitate PV panel installation.


For this project, the final costs (FY2016) were as follows:


kitchen (incl. appliances)$2,380
solar panels$900*
permits/special inspections$2,975
electrical service upgrade to main house$2,200
total cost$65,575
* installed cost to owner after all incentives, tax rebates and depreciation
total area600 sf
total cost per square foot$109/sf

The rent for this unit was set according to the City of Portland’s Housing Bureau:


  • Affordable Housing Standard for Portland: $1,374/month including utilities (from the 2015 Portland Housing Bureau Guidelines, no longer available online)
  • Assumed electricity use: $98/month (2015 HUD Utility Allowances for Portland).
  • The landlord will charge $60/month for water, sewer and garbage
  • Solar panels are expected to reduce the cost of electricity by about $28/month


Adding this up, the rent could be approximately $1,250/month and still hit the Affordable Housing Standard. We volunteered to set the rent lower, at $1,150. Even with the reduced rent, the return on investment was sizable:


$13,800 (annual rent) / $66,575 (total cost) = 21% ROI


This will be a little lower because of operating expenses, but we’re also not accounting for the added value to the property as well as all the other benefits of local investment. Even compared to the best you can get on Wall Street, building this project and renting it for less than the Affordable Housing Threshold was still a fantastic investment.