Pros/Cons of two buildings on one lot

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Pros/Cons of two buildings on one lot

Scott MacIntyre
Member since 2019 · 7 posts · 4 votes

Hi all, I'm a newer investor with only single-digit units and have recently seen a few on Zillow with a duplex and a detached single unit on one lot. Are there any pros/cons to this sort of set up that I should be aware of before seriously considering? Thanks!

-Scott

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Scott Anderson we run into a lot of coach house setups here in the Chicago area, and I always tell people to look carefully at the coach house structure. If one of these was not built by a legitimate builder then there could be some long term CapEx issues that will be tough to solve related to plumbing or electrical. Does the second structure have an electrical and gas meter or is it sharing with the main structure? Does it have its own sewer line? How about water? These are the main questions I would be asking in this scenario.

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  • Russell W.
    Rental Property Investor · IL · Member since 2015 · 165 posts · 107 votes
    5y

    Although I don't know how it would affect it, you should contact your insurance agent to see how you would insure the buildings and if they'd be under the same policy or two different policies. I imagine it would have some cost implications. Food for thought.

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Scott MacIntyre - Typically they are older and stick-built so they usually need heavy rehab.  They also usually take up most of your lot so you dont have the normal space you would be used to.

    On the plus side, numbers always seem to work a little better. 

    In general, I would say they are riskier.....but that's also how you get better returns.  Figure out your risk tolerance and make it happen! 

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  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    5y
    Scott, From an Insurance perspective, you need to coordinate the Liability coverage. There are several ways the companies want to handle it. One option is to write two dwelling fire policies with the same company. Usually the company will want liability on both policies. That is why you keep them with the same company. I have one company that did not want the overlap so they wrote the Liability on one building and extended the coverage to the other. We then wrote a policy with out Liability for the 2nd bldg. If you go that direction I would get it in writing that the Liability includes the 2nd bldg. You could also put the coverage under a commercial policy. That type can include multiple buildings but the costs are generally higher
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