During the past few years, point-based POMDP solvers have gradually scaled up to handle medium sized domains through better selection of the set of points and efficient backup methods. Point-based research has focused on flat, explicit representation of the state space, yet in many realistic domains a factored representation is more appropriate. The latter have exponentially large state-spaces, and current methods are unlikely to handle models of reasonable size. Thus, adapting point-based methods to factored representations by modeling propositional state spaces better, e.g. by using Algebraic Decision Diagrams (ADDs) is needed. While a straightforward ADD-based implementation can effectively tackle large factored POMDPs, we propose several techniques to further improve scalability. In particular, we show how ADDs can be used successfully in factored domains that exhibit reasonable locality. Our algorithms are several orders of magnitude faster than current point-based algorithms used with flat representations.