Three Units is Now Considered Commercial?

Question

Good Morning,

I’m trying To get a building permit(BP) in Philadelphia for my 3 unit multi-family apartment. My residential BP was rejected because it’s considered commercial because I have more than 2 dwellings. Has anyone heard of this? I thought anything more than 4 dwellings was considered commercial.

Ash Hegde · Answer

For lending, it's true that 4 or less units is considered residential, but for permitting and local codes it may not be the same rule. Looks like @Eric Greenberg gave you good info.

Eric Greenberg · Answer

My understanding is Philadelphia now considers 1-2 units different than 3+/mixed/etc for filing fees/permits/ fire/etc

‘Filing fee

There is a non-refundable filing fee which is applied to the permit fee.

• For one-or-two-family dwellings: $25
• For all other uses: $100’

Account Closed · Answer

A residential area can have one of several residential zoning designations. For example, R-1 may only allow Singh family homes on lots that are >0.25 acres; R-2 might allow a higher density of SFHs—maybe row houses; R-3 may allow duplexes; R-4 might allow up to 10-unit MFHs. This is all hypothetical, but you get the point.

Rich O'Neill · Answer

@Lekan King yes @Eric Greenberg gave you the correct info. 3+ units is considered commercial in Philly and you need commercial permits, which generally requires architect drawings and building plans, even for cosmetic work. It's a bit crazy but the way it is. This is why lot's of people don't pull permits for work that is "gray area" as to whether you need them or not.

Bud Gaffney · Answer

No

Russell Brazil · Answer

You are confusing Fannie Mae/Freddie Mac/HUD underwriting guidelines for loans with local zoning and permitting. 2 completely separate animals.

Bonnie Griffin Kaake · Answer

@Lekan King As you become more involved in real estate investing and construction, you will learn that the term "commercial" and "residential" can be used differently depending on who you are talking to. It is best to ask for clarification when you hear those words and are confused. In cost segregation terms, we use commercial and residential as slightly different. A traditional commercial property of almost any kind qualifies for cost segregation. At the same time, a residential rental property also can qualify for cost segregation. Then there is the short-term Airbnb/VRBO type property that is considered a business rather than strictly "residential". A personal residence on the other hand is strictly "residential" and does not qualify for cost segregation. Hope I didn't further confuse you. ;-)

Three Units is Now Considered Commercial?

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