Converting a single into a 2 family a good idea?

Question

Hello BP, fam! So I'm in the process of purchasing a single family in Massachusetts and would love to get any input on the topic of converting a single family into a 2 family. The home is about 1800 sq.ft both units would be 2 bed 1 bath with laundry in each unit. I guess my concern is what the cost would be of converting a single into a 2 family. Also what to look out for in regards to possible laws and regulations. If there is anyone specifically in Massachusetts that has some experience doing conversions, I would greatly appreciate any feed back. Thank you so much in advance.

Lien Vuong · Answer

Start with reviewing the zoning of the property and then go to Table of Use for that town and see what's permissible in that town and then go to City Hall to speak to them about your intentions. You would want to start talking to the Building Inspector and start the relationship with that person.

Derreck Wells · Answer

Along with the things mentioned above, you're going to run into;

Lead paint issues.

Issues with the electrical... both units will need to be completely separate from each other, including panels and meters.

Issues with plumbing... again, both need to be separate, unless you're going to be dumb and include hot water in rent.

Issues with parking.

Issues with septic... it won't be big enough and will need to be rebuilt to be brought up to code.

When all is considered, I'd bet the numbers don't work. What would you get in rent if you renovated to make a great single family rental vs the rents from two less desirable, probably weirdly laid out, small units? Factor in the expense of gutting the house to the studs and converting to a two unit VS simply renovating and keeping it a single family and see what your returns are. I'm betting renovating and keeping it a single will cash flow better than the 2 unit approach.

When people rent a single family, they tend to think of it as their home, not just their temporary apartment, and will take better care of the place. They get the pride of "ownership" that doesn't come from an apartment with annoying neighbors and will stay longer too. I never hear of super long term tenants (10-20 years) in a multifamily, so you make out on vacancies and turnover costs too. I'm sure there's a metric you can find that will show you average stays in our area for single family rentals vs apartments.

Whatever you decide to do, the house will need to be deleaded if it's going to be a rental. The state law gives you 90 days from date of purchase to start the deleading in order to remove the liability of past tenents. Yes, you're responsible for past tenants that got lead poisoning there if you don't delead. The state basically changed the law to keep the liability with the property and transfer that liability from owner to owner until one deleads and breaks the chain. If you delead, the the past tenants can't sue you, they need to go after the previous owner. This is actually a good thing to know during the purchase... If it isn't already deleaded, it will have to be so it makes a great negotiation tool.

Assume around $5000 per unit and count the exterior as a unit, so $10,000 to delead a single family. Most come in at around half that, but if windows need to be replaced, or if the exterior doors do and need to be custom sized, it can get expensive quick, so $10k is a safe negotiating number. This will be the case for any property built before 1978.

If you want me to, I can run addresses through the database and see if they've ever been inspected. Often people get them inspected then don't actually delead, they just lie and check off unknown in lead paint disclosure. The state knows this happens, so every inspection goes in a state database so we can tell if it's been done or not.

If it has been inspected and not deleaded, you cannot renovate until a licensed deleader makes it lead safe and you get a Lead Certificate from the state. It would be illegal and get flagged as unauthorized deleading (UD) and you would NEVER be able to get a lead cert, only a letter of environmental protection which states you performed UD, got caught, then had to pay a licensed deleader to come in and fix it. This will likely increase your insurance and will tell tenants that you do illegal, sketchy, dangerous stuff with your rentals. Not the reputation you want!

Good luck on whatever you decide to do!!!

Derreck

Michal Kasza · Answer

@Colleen F.

Yes, sure need to think about this strategy a bit more. Also will need to run number on both scenarios. Thanks so much for the feed back.

Colleen F. · Answer

For splitting, some major cost drivers are the HVAC system you have and what you want to convert to.  Whether you are doing up/down or side by side, so basically where do you put a fire break wall.  Are your stairwells going to need widening and/or will you need an additional exits.  Look at the two family code for the area you are in and it will tell you some of those things.

Lien Vuong · Answer

Building inspector and a zoning attorney in the location community would be able to answer all those questions for you.

Michal Kasza · Answer

@Lien Vuong

Thanks so much for that information. Will definitely get on that asap. As of now I know that zoning is not a issue but exactly what I will face throughout the process is something I'm worried about.

Michal Kasza · Answer

@Matt Nico

Thanks for the feed back. I have reached out to the local county and found out that it was possible to convert but have not asked about plumbing and electrical, this is something I will do asap. Also you have converted your home into 2 units side by side. Would you say converting a home up/down would be more difficult? would you say converting a 1880's home is worth is as well, knowing that I might face a lot of unknowns throughout the rehab process and would it be smart doing a conversion in today's economy?

Matt Nico · Answer

Hey Michal,

I am actually in the process of finishing up exactly what you want to do now. I took a 5 bedroom, 3 bath home, and turned it into a 3-2 on one side and a 1-1 on the other side. If I were you, I would make a call to your local county were you would get your permit and ask them about electrical and plumbing before you do anything.

For me personally, it became a nightmare. I had to run a lot of new electric wire and change around a lot of the plumbing. I do it all myself so I didnt have to pay much other than for supplies, but I'm still in the high $30,000's to do it. I'd guess I would be up around $70,000 if I used contractors.

Good luck,

Matt

Converting a single into a 2 family a good idea?

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