converting apartment house into 4 unit?

Question

Is it possible to convert a>4 unit apartment house into a 4 unit? Its not much bigger. Would I be able to do it during the purchase and possibly obtain traditional financing? is this only something that can be done after purchasing with a commercial loan?    Also has anyone had success using a 203(k) to convert in this fashion?    Thanks for the responses, -jim

Steve Babiak · Answer

Bill,

I think he's asking about going in the other direction, not from 1 unit to multi-unit, but rather from more than 4 units down to 4 units.

Zoning should already be in place for the number of units (I hope, or else you might have to limit to number of units permitted by zoning).  Reducing the number of units probably won't change the zoning.  You'd probably still be needing commercial financing (since residential is for 1 to 4 zoned units, and this one would still be zoned for more).

Jim Burns · Answer

im looking to take advantage of conventional financing if possible. Also the property is very close to an expensive private college and I think a few large 2 bed 2 bath units (combined 1 bd 1 ba) will make a killing as they would be the only ones of that type in the neighborhood.

Also im looking to owner occupy as well so I would like to have access to lower rates available for a 1-4 unit property.

As an aside, I know rule #1 is not to get emotionally attached to a deal. this house is perfect though as it has a large parking area and 3 car garage in the heart of a dense turn of the century area, quite hard to find in the city here.

Jeffrey K. · Answer

What is the reason for doing this?

Bill Gulley · Answer

Ooooh! LOL, > greater than, ok

Yep, Steve is right! if the property is zoned commercial you will have a problem on the appraisal with conventional financing. I have done SFD like that, but with supporting comments from the appraiser. If the area is commercial, multi-family, it may not fly. Ask you lender before you start knocking walls out! 1-4 will go conventional owner occupied/non-owner occupied, but zoning is usually residential R-1 through R-4, so check on that.

Bill Gulley · Answer

It's been done before, I had a triplex that was originally one very large house, but I did not do the renovation. Better check on zoning first and then ask the utility company about seperate meters. I would never have a unit where I was paying utilities....never. In some states you can become a utility provider, something you do not want to do!

converting apartment house into 4 unit?

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