Curious if you can build a DADU in your back yard? The rules for backyard cottages have been radically changed. Join Bruce Parker from Microhouse and Stefan Hansmire from Hansmire Builders to learn what is possible under the new code and how to establish a realistic budget for your cottage.

Thursday September 12, 7:00 pm.
West Seattle Coworking, LLC
6040/A California Ave SW, Seattle, WA 98136

Space is limited - please consider joining us on November 21st at the PNA.

Thursday November 21st,  7:00 pm.  

Phinney Ridge Neighborhood Association

6532 Phinney Ave N, Seattle, WA 98103



Childhood Home Creates Options for the Future in Eastlake

In 2010 Colette and her family purchased her childhood Craftsman home in Seattle’s Eastlake neighborhood.  As Colette and Chris noticed similar houses nearby being replaced by rows of apartment buildings, they considered ways to preserve their own home and history. That meant improving and maintaining the original house, and also creating an income stream to secure their options for the future. A backyard cottage turned out to be just what they were looking for.

eastlake 3sm.jpg

How did the idea of building a backyard cottage come about?

Colette: My husband Chris and I moved back to Seattle in 2010 with our two children and were able to buy my childhood home from my family. The home needed extensive work so we did it at a very slow pace. Once the main house was close to being finished we noticed that many houses on our block were being sold to developers. What was once a quiet Craftsman lined street was turning into rows of apartment buildings.

That got us thinking about how to preserve my childhood home and invest and grow with the neighborhood. It was simple: build a backyard cottage and use it as a short-term rental to pay off the new debt, and later have a guest house. We also began to see it as a great investment into our retirement and something we can leave to our kids. We can live in the cottage when the kids are gone, or perhaps we can fly off to Italy and let the cottage and house support us in our next stage of life. The cottage suddenly gave us positive options for the future. 


What did you enjoy most about the process?

Colette: I loved every part of the process. Because our lot was small and there were only a certain number of ways to build our structure, the design part became quite easy. Bruce and Stefan [of microhouse] were great at listening to what we wanted and were always willing to change things to get them right. 


At one point in the build we had some large joists delivered that were used as our entryway ceiling and our loft floor. Garrick, our builder, set them up for me and loaned me his sander so I could work on them before they were installed. I really enjoyed that they allowed me access to work on projects for the cottage.

I was also able to design the inside of the cottage to fit furniture I was buying along the way. Walls were made to fit vanities and all the lighting was installed to my specifications for the fixtures I had bought. 

What challenges did you face during the process?

Colette: My biggest challenge in this process was my neighbor. They didn’t like what we were doing. They objected to noise, dust, and anything that needed to go over their property line. It became quite ugly and it was a sad break to a 30-year friendship.

For me, living through construction was pretty fun. It was great to look out the kitchen window and watch walls go up. Garrick and I became friends and it was easy to have him around. He was missed when the project ended. 

How long did the process take?

Colette: It took about a year to get the plans down just right. The build began just before fall of 2017 and ended in the spring of 2018.


Is there anything you would do differently if you had to do it over?

Colette: If we ever decide to build again I would work with Bruce, Stefan and Garrick again. It was truly a pleasure. 


What’s your favorite thing about your cottage?

Colette: I love the size of our cottage. It looks narrow and small from the outside, but when you enter it seems much, much larger. It feels like a trick of the eye. I love the shiplap wall we built as a focal point. I love that the appliances all fit into the kitchen I assembled. I love that I was very much a part of the build and that my ideas and creativity were used throughout. 


a chef's kitchen, custom beer taps and abundant light

The owner built this backyard cottage as a rental but fell in love (with the cottage) during the design process and decided to rent out his house instead. Designed to emphasize custom details, this DADU reflects of the owner’s lifestyle.


The overall strategy with this backyard cottage, as it is with most of our designs, is to keep the structure simple allowing a larger percentage of the budget to be spent on finishes. As the height and size of DADUs is limited based on the size of the lot, the maximum allowable footprint for this cottage was 328 sq. ft. 

It features an open floor plan on the ground floor with a kitchen, living and powder rooms.  Upstairs is a master bedroom complete with a kitchenette, and a bath with laundry room. 

Ceramic tile accentuates the entry area. The view from the entry towards the kitchen and patio beyond.

Ceramic tile accentuates the entry area. The view from the entry towards the kitchen and patio beyond.

The kitchen is located along one wall making it both compact and simple. A movable kitchen island creates a flexible work space and accordion doors open onto a new patio filling the ground floor with light. 

Exposed wood joists add warmth and texture in contrast with the concrete floors

Exposed wood joists add warmth and texture in contrast with the concrete floors

A door located at the bottom of the stairs allows for the two floors to be used independently.

A door located at the bottom of the stairs allows for the two floors to be used independently.

Where some houses may come with a man cave this DADU features a "man wall" with big screen tv, electric fireplace, weight rack and the ultimate amenity, beer taps. A keg fridge is located behind the wall in the under stair space.

Custom-built beer taps. A keg fridge is located behind the wall in the under stair space.

Custom-built beer taps. A keg fridge is located behind the wall in the under stair space.

The city of Seattle limits both the eave and ridge height of cottages allowing greater height for a gable roof which we took advantage of to good effect. The master suite features vaulted ceilings and abundant light. A kitchenette allows this room to be used separately from the first floor.


The master bath features vaulted ceilings and skylight. A laundry room is tucked off to one side under the eaves, a shower under the other with beautiful tile work featured throughout.


backyard cottages top $100,000 views and walkability as most desirable amenity

Everyone knows that a home’s price is affected by such things as its size and condition and the quality of nearby schools. There’s also the $50,000 walkable cup of coffee, the $100,000 view and the $200,000 backyard cottage.

broadview backyard cottage - rental and family occupied

broadview backyard cottage - rental and family occupied


As in Seattle, backyard cottages are being built in Berkley in increasing numbers. In a recent berkleyside article, bay area real estate agents discussed the relative merits of various home amenities. 

Pricewise, an in-law unit or a tiny home can boost a home’s value more than any other element, agents said. 

“People love it when the house has a little separate cottage or in-law unit so they can accommodate friends and family who are visiting from out of state,” said Victoria Lynn Curtis, an agent with Better Homes and Gardens. 

"Workers who telecommute can use such quarters as offices, and artists can use them as studios; double-income professionals can use them to house nannies or au pairs. Or homeowners can rent them out, generating a tidy income".

However real estate appraisers struggle with how to value backyard cottages and other ADUs primarily because there are simply not enough comparable sales to serve as a guide. Bruce Parker from microhouse and Stefan Hansmire were recently invited to participate in a panel discussion about backyard cottages during the Appraisers Coalition of Washington State conference. One topic of discussion was the use of backyard cottages as rentals. This trend has only increased in recent years as more people have become aware of and begun to use their cottages as short term rentals. Short term rentals provide a relatively high rate of return and cottage owners would like the rental income to be considered in the appraised value of their homes when seeking financing. However, most municipalities have owner occupancy requirements. In these cases, a lender or underwriter must asses the value of the home without income from an ADU because in the case of foreclosure the ADU must be removed before the house could be rented by the loan holder. That takes us back to the use of comparable sales to establish an appraised value. The contribution of an ADU to these valuations tend to be less than the cost of construction. This in turn makes construction loans harder to obtain for DADU construction. As a result, most home owners use cash or home equity to finance construction.

Value vs Cost

The cost of construction varies depending on a number of market factors including the cost of materials and labor. The cost of building a backyard cottage has been increasing since the recession. Assessing the value of a cottage for those planning to build one, involves consideration of the many possible uses of a cottage over the long term.  As discussed, many people use cottages as rentals. In this case,  a careful consideration of the rents in your area and anticipated costs and expected rate of return can help you establish a working budget.  

magnolia backyard cottage - short term rental/long term family occupied

magnolia backyard cottage - short term rental/long term family occupied


Even when cottages are used as rentals, that is often only one of many planned uses. Ben and January's cottage in Magnolia is one example. They originally rented their cottage on AirBNB.  Now that the cottage has been paid off, January's recently retired father has moved in and is enjoying being closer to his grandchildren and urban amenities. 

While it may be hard to put a value to how a well designed home makes you feel or the value of having a family member living nearby, some qualities are easier to asses. If that family member is an aging parent who would otherwise be living in an assisted living facility, it is relatively easy to look at the costs of local facilities.  For others building a new cottage may be less expensive than remodeling their existing house to more closely meet their needs. For example, new cottages can incorporate universal design components to assist those with mobility impairments. Having established a realistic budget based on your needs and values will guide the many decisions that make up design process.


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