Converting a 3 unit into a 6 unit in Chicago. Costs?

Question

I am looking at a very old 3 unit building in Chicago. It's zoned as a 6 unit and sits on two Chicago lots. I am expecting a full gut rehab here. I think the structure is sound, roof sound, windows okay and brickwork in good shape. Any idea's how to do a rough calculation on rehab expenses? Anyone want to come out and look at it and give me a ballpark figure? Any recommendations for contractor or architect? Any information greatly appreciated. Thanks!

Michael K Gallagher · Answer

@Mark Goodman, you want to talk to @Jonathan Klemm from quality builders.  He's the best guy in Chicago land for this kind of thing.

John Warren · Answer

@Mark Goodman for rough numbers, I think you can use 50-100k per unit. There are a lot of variables you don't have in the equation yet. Are you replacing the hvac? If so, which system will you choose? Will you provide central AC? For sure you are doing new plumbing and a new water main (bye, bye 20k). You are upgrading the electrical system as well with all new conduit, service, etc. What about insulation? Is this a plaster building? I would budget an extra 5-10k per unit for the demo and removal if you are truly doing a "full" gut. I have often saved 80-90% of the plaster to save on this cost.

You will want to speak with a great architect who knows the Chicago codes. @Prashanth Mahakali and/or @Samuel Pavlovcik are both active on here and would be great architects to connect with.

John Clark · Answer

condoing is easy, your lawyer can create a condo declaration.

Do you intend all units to be the same as a rental? If you are renting, try a mix of one and two bedroom units. More than two bedrooms and you start running into "professional renter" families. Avoid those at all costs.

One and two bedroom units don't need in-unit washer and dryer. Have a coin-operated common laundry room in the basement that can be accessed from inside the building. You don't want them on each floor because a leaking/flooding laundry will be a major problem for you. Put watery things in the lowest level if you can.

John Clark · Answer

First of all, Chicago WILL make you increase the size of the service pipe to the building, and it will be copper. Lead is no longer allowed (much to the plumbers' union dismay).

Second, figure that you are going to have to replace/upgrade the sewer line(s) and as Scott Mac said, put in backflow preventers.

Third, You will need a separate electric service for the common areas.

Fourth, how are you doing heat? If common furnace(s) your ductwork will have to be large and extensive. You might want to consider individual apartment furnaces (ductwork will kill you) or, better yet, go with all electric heating. You will want to invest heavily in insulation to keep heating costs down (electric heat is most expensive) for the tenants and each apartment will need on the order of 150 - 200 amp service. To save yourself nuisance calls from tenants when a circuit breaker trips, put the breaker boxes in each apartment. Good part is that each tenant now pays his own heat, and without the extra ductwork, interior layouts are more flexible.

Fifth, decide whether air conditioning will be window units that tenants have to buy or built-in apartment units for each unit (and design your electric and ductwork layouts accordingly).

Sixth, who is supplying hot water? Are you doing one gas-fired unit for all, or tankless gas units for each apartment, or electric hot water for each apartment? I don't think there's tankless electric, but maybe there is. Adjust electric service accordingly.

Seventh, Reconsider your decision to not replace the roof.

Eighth, re-evaluate the windows situation, only with an eye towards insulation. Cold tenants complain, especially when they get their electric bills and realize they're paying through the nose for heat.

Ninth, get your head examined. Why have six tenants when you can easily create a super-nice duplex building, condo it, sell the condos and move on to something that doesn't expose you to the risk of professional renters or the "democratic socialists" on the Chicago City Council?

Scott Mac · Answer

Here are some of my random thoughts:

Make sure to allow for enough Amps from the pole to the building, if your electrical code is saying 200 amps per apartment you will need 6 lines, if your code allows 100 thats only three lines.

Think meter placement electric and water, gang them if possible.

Often furnaces are put in center(ish) of the basement, is that best or could that space be used better for a laundry facility, and the furnace(s) more towards the wall.

Is the old brick chimney needed or can you vent furnace(s) and hot water heaters directly outside. If so maybe demo the top of the chimney and roof it over vs stressing over liner cracks in an old structure.

Parking can you park 12 cars on the property so it doesn't look like a motel with the front yard a parking lot, how about only 6?

Will the now smaller units need outdoor storage shed's (tough sheds or similar) for bikes, and the general things renters have?

Do you have enough Amps to put a stack washer dryer unit in each apartment, vs the common area on it's own meter?

Can the size sewer pipe handle doubling the load? What about the water pressure, is the property water in-feed line, is it big enough to make code required pressure for all the units?

This would be a good time to put in sewage backflow preventers.

Will your water connection in the basement be a lead pipe cinch? If so on a full gut will they make you replace that in-feed lead pipe?

Decide if you want a basement mechanical room for the furnaces and water heaters or will these be in the individual apartments.

If it's not for new units, maybe take the non-washing  area of the basement and wall it off as you personal storage area for things you may need on site...lock it good, real good with a heavy door, or it will disappear.

Good Luck!

Mark Goodman · Answer

Thanks for that reply. Lots to think about. Unfortunately, it does have a back yard but it does not have an alley. So the yard can not be used for parking. Any idea about price per sq foot to rehab? Ballpark figure - like $100 a sq foot?

Jonathan Klemm · Answer

Appreciate the mention @Michael Gallagher!

Hey @Mark Goodman - Curious about which Chicago neighborhood you found this gem in.  That's awesome that you can convert a 3 unit into a 6 and sounds like the right way to go.  When you say full gut rehab do mean taking out of the existing plaster in its entirety or keeping most of that?  We often see full renovations with new electrical & water services between $90-$110SF +/- depending on finishes and the area could be much lower or higher too.

Happy to come to check out the property and give you some thoughts.  Let's link up offline of the forums.

John Warren · Answer

@Mark Goodman I would connect with Samuel on this. You are well into architect land at this point. If you can do six units, I would do it in a heartbeat. A legal six unit with all new mechanicals would be a cash cow, and you would drive the value way, way up.

Robert C. · Answer

@Mark Goodman, My first thought is I rarely see a good reason to move a building from 2-4 units to 5-6 units. Your cash flow may improve, but you may not be increasing the long term value of the property since 2-4 are appraised/appreciate differently than 5+ multifamily. You also lose access to certain loan products.

Maybe if it’s a condo conversion… maybe.

Mark Goodman · Answer

Hi John, I know for sure its zoned for 6 units because its been taxed as a 6 unit building for years. I did write to the alderman asking if I could make it a 9 unit building. It's about 9,000 SQ feet. This was what they wrote back to me. I think the parking issue will kill the 9 unit idea but 6 will be granted due to the age (grandfathered in).

"At approximately 50’ x 150’ it already has enough minimum lot area, as RM5, to allow for nine units. Is the person maybe asking if the building can by physically modified because based on units alone the lot and zoning district are not the issue."

Converting a 3 unit into a 6 unit in Chicago. Costs?

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