Hightstown, NJ · Member since 2015 · 7 posts · 3 votes
Greetings,
I have been presented with an opportunity to purchase a Single Family home that currently has 4 separate units, each with their own living space, each with rent opportunity. One of the additional units appears to have been built, but is not found in the county records. At first glance the ROI is exceptional, however there does seem to be risk. The property is metered and zoned as one house, not a multi plex. Does anyone have experience with this, thoughts and/or warnings? It is enticing to say the least as renters are in place and no rehab is required at this time, I just want to go into this deal with eyes wide open. Thanks for the thoughts.
No matter how the house is currently set up if it is not zoned as a multi-unit you are opening yourself up for a nightmare. First thing is I wouldn't believe a single thing the current owner tells you about how he has been doing it. To really understand what your are getting into you need to call or visit zoning and tell them the situation. They will be able to tell you if the deal is dead because there is no way the property can ever legally be used as a multi-unit or if there is a grandfather clause or some other way through possible zoning hearings to have the property rezoned. Otherwise you will always run the risk of having to turn the property back into a single family home to obtain a U&O and conform to local zoning laws. Also the addition with no permit history is a huge red flag. I would also see what process you would have to go through to have that legally recognized else you could always run the risk of having to remove the addition.
If there is a process to go through and you decide to take on that challenge make adjustments in your purchase price accordingly. You will spend considerable time, effort and cost to bring the property into compliance. Sometimes properties like this offer huge upsides if they can be purchased right and brought into compliance. If they can't you have just bought a nightmare. Hope that helps!
Thank you all for your prompt, informative posts. This is going to be my first purchase so I'm going to heed these warnings and pass. Although there could be opportunity, it sounds like there is a high degree of risk and effort to covert this into something legal, if that is even possible. I don't want a nightmare! Thank again.