Townhome without HOA but buying all 4 units (rezoning possible?)

3 Replies

Sorry if this may be a duplicate. I think I posted it in a local category before. 


Hey guys, I came across a off market bundle of 4 townhomes. These are older 80's builds but in a Class B working class area that is booming. Lots of shops in the area and they are building a new multifamily down the street. Also lots of other older townhomes in the area.

It was initially marketed as a 4 plex and when I dug deeper realized that these were four individual townhomes. They are selling all four units but they are zoned single family homes and taxed individually. They all have separate electric but they share water.

I've read the previous posts that warn about purchasing townhomes without HOA because you can't always agree with the other owners about fixing the roof and such, but since I will be purchasing all 4 units does that negate these negatives?

I've also heard townhomes just don't appreciate much. This deal does have some cash flow, but not a huge amount, but its in a highly desirable area close to everything. Another set of 4 units is under contract down the block for about 10% higher that what this one is selling for.

This something I should think about purchasing with a bundled portfolio loan? I already have 8 fanny / freddy individual mortgages and would not qualify for 4 more. Kinda sucks. So I would only be able to do a higher interest rate portfolio loan on this. Numbers still are OK, but not out of the park great.

Also, has anyone ever heard of going to the city and rezoning this into a actual 4 plex. With one address and the units individually labeled A,B,C,D...? So it would be taxed as a residential 4 plex instead of 4 individual single family homes? Advantage of this is it would fall under one loan and be able to get ONE federally backed fixed rate mortgage (since its only 4 units)

Any input is greatly appreciated!!!!

I would expect buying the 4-Plex and selling four individual townhomes would yield a decent profit.

I'm a noob to this subject, but it seems like a condo lawyer would be able to create an HOA. I would have also expected the HOA agreements already prepared when they were divided into separate entities.

Originally posted by @Gary Abner :

I would expect buying the 4-Plex and selling four individual townhomes would yield a decent profit.

I'm a noob to this subject, but it seems like a condo lawyer would be able to create an HOA. I would have also expected the HOA agreements already prepared when they were divided into separate entities.

 Thanks Gary, 

These are lower quality smaller townhomes. I would prefer to actually make it a real 4 plex and sell it to an investor down the road, or even have someone house hack. It seems to me that would be more valuable than selling them off individually. Same problem would arise for the new individual owners who share common roof and utilities. 

I just don't know if taking 4 individual townhomes that share a roof and converting them into a residential 4 plex with one address is even possible. I guess I have to call the city and ask them.  

Why spend the money and the time?

Properties are almost always worth more sold individually.  Affordable housing starter homes is where the growth market is.

If it were me, I would turn around and sell them all for a profit and buy other cash flowing multi units but you have a great opportunity for tenant buyers if you wanted to 

rent for a while and sell 1 when you see a better opportunity.

I would not combine your properties.