Hey everyone. I'm looking for some advice/help on how to go forward with a current deal I'm currently doing due diligence on. This is a first time home buy.
My plan was to buy the property, rent out the upstairs and live from the basement. It has fine parking and the numbers work ok enough given it's in Lehi,UT and I'm expecting appreciation to help me out enough. Besides price per sq ft was a steal.
It has two kitchens and a walkout. I've discovered the property is below the 6000 min sq ft lot rule to conform to Lehi's ADU requirements. However, the home was built in 2005 which from what I can tell is before the min lot size requirement was put in place. Does anyone have experience grand fathering in an ADU? I've also looked at other strategies to frame it as renting out rooms without getting the city involved to make it officially an ADU. Has anyone done this?
Congrats on finding first place that can potentially work out to your goals.
With house hacking, you may be able to qualify for an FHA or other low down payment home loan since you are planning on living in the home. This will help save money out of pocket, leverage more, and maximize cheaper loans from the get go. There can be pros and cons from how you look at it.
I'd make sure that the numbers work out good, ensuring you are getting legit rental comps from MLS, rentometer, apartments .com, etc. Are you going to hire a leasing agent or property manager, or DIY?
With the ADU, if there is a basement - I assume you are wanting to officially convert it into the ADU? Not build something out back? If you are building in the basement, are the mechanicals (HWT, Furnace, plumbing, etc.) downstairs - if so, this may add a lot of additional costs moving things around to make it safely livable down there, while also adding in your additional mechanicals for your side of living. I'd ensure you look into sub-metering (splitting utilities separate at the meter so both can pay separate) or just factor that into the utility costs with increased rent. If you have to move mechanicals around, if y'all have natural gas HWT/furnace - then factoring in the exhaust components will be important to ensure proper ventilation.
I'd ensure getting an inspection, and reviewing the property condition disclosures to check and see if it has flooded in the past. Look into other people's opinions on basements in your local area. Factoring in all the closing costs (will still be a decent amount, a realtor can give you a rough estimate) and potential scope of work (how much it will be after closing) converting the basement so you can live in it.
It is probably possible, but it is definitely trying to force what you are wanting - whereas there can also be other investment opportunities elsewhere in different asset categories. Having a home and building up some equity, loan pay down (from tenants & self), tax depreciation, and appreciation of the local market (can help when realizing the gain in future deals or when sell).
I'd recommend attending some local meetups or REIA's, as well as chatting with some contractors that have done some conversions to get rough estimates based on their prior experience, pictures, sizing, etc.
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
8mo
2005 seems newer so not sure if it's possible to be grandfathered in. I think you need to be in touch with the city. Verify zoning and when that requirement was in place. Not sure if you can get a variance with the city. Be careful with trying to fly under the radar if the ADU is not allowed. Can get messy fast
Hey everyone. I'm looking for some advice/help on how to go forward with a current deal I'm currently doing due diligence on. This is a first time home buy.
My plan was to buy the property, rent out the upstairs and live from the basement. It has fine parking and the numbers work ok enough given it's in Lehi,UT and I'm expecting appreciation to help me out enough. Besides price per sq ft was a steal.
It has two kitchens and a walkout. I've discovered the property is below the 6000 min sq ft lot rule to conform to Lehi's ADU requirements. However, the home was built in 2005 which from what I can tell is before the min lot size requirement was put in place. Does anyone have experience grand fathering in an ADU? I've also looked at other strategies to frame it as renting out rooms without getting the city involved to make it officially an ADU. Has anyone done this?
Usually, the property owner can live in a basement with no issues, you just can't rent a basement to a tenant without meeting all city ordinances.
Regarding renting out rooms - another great way to make money! Just check with your city if they have issues with Boarding Houses or cap the number of unrelated individuals living in a home.
