Turning a Single Family House into a Duplex...?

Question

Has anyone here ever turned a SFH into a duplex?  I'm looking to do that in the Indianapolis, IN area / vicinity, and wondered if there were any thoughts about that in the Bigger Pockets community... (I know there will be matters like zoning to consider.)

Jeff Schechter · Answer

Unless you have a very large SFH, and can create floor plans that provide space, privacy, parking, and separate metering for both units, it's likely not worth the expense of the rehab.  Individual units of duplexes in Indy have higher vacancy rates than SFH's.  Likely because the rents aren't much different than a SFH.  If you want a duplex, you're better off buying something that is already a duplex, already metered that way, and just rehab it to good rental standards.

Jason Powell · Answer

@Jeff Schechter thanks for the feedback. Very helpful.

Jason Powell · Answer

@Jonathan Greene thanks for pointing out that it would be a very rare occurrence when a scenario like this would make sense. Very helpful.

Mike Wood · Answer

@Jason Powell Yes, but the SFH was a gut project when I bought it. I picked it up for just a bit more than land value, with the original layout being a 2/2 1600ft2. We reconfigured in a 2/1 duplex, one unit being 850ft2 and the other being 750ft2.

I did spend more on the renovation to convert it to a duplex,  and the finished project was worth less than a SFH, but I'm a build and hold investor.

I don't think it ever makes sense to convert a turn key SFH to a duplex, unless your talking a basement conversion.

Evan Polaski · Answer

@Jason Powell, agreed.  While I know of some in Cincinnati, particularly around Univ of Cincinnati, it never seems to be a worthy venture.  As Jonathan mentions, two families typically sell for less than single families anyways, so you would be spending money to bring down the ARV.

From a cash flow position, you will likely only be getting marginal, if any, additional rent out of two units than a single family. i.e. in the neighborhood my duplex is in, I get $3k/mo total, $1,500/unit.  Single family houses rent for 2500-2800/mo.  While $500/mo is nothing to scoff at, the cost to convert would be $60k+ (or 10 years rent), and I would decrease the resale value by probably 25-30%, which in this neighborhood would mean over $150k in value LOST, by spending $60k.

Granted, I am speaking about a specific market in Cincinnati, but as the others mentioned, it typically does not pay.

Jonathan Greene · Answer

There are almost no scenarios where this will work financially and with the blessing of the town. If you found a SF tear down on a block with other multis, you might have a chance there to make it work, but not turning a single into a duplex. It will never be cost-effective given the ARV on the other side.

Mike D'Arrigo · Answer

Jason, in answer to your question, we're a turn key company and although I am in CA myself, I have partners on the ground in both Indianapolis and Kansas City. Anyone investing out of state really needs a property manager. A good PM is key to making it all work.

Jason Powell · Answer

@Mike D'Arrigo Thanks for the response/perspective Mike. I'm curious to know more about your investing in multiple cities. If you live elsewhere, do you travel to Indy much because of your properties? On the other hand, I'd think you'd have property managers (and/or acquisition managers) for all of that, right?

Mike D'Arrigo · Answer

@Jason Powell  There's a lot of converted SFR's in Indianapolis but I'm not a fan of them for all the reasons @Jeff Schechter said, seperate metering being one of the biggest issues.

Turning a Single Family House into a Duplex...?

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