Thoughts on buying a duplex that's been converted to a 4 unit?

Question

Hi All,

I'm looking at a duplex that has been converted into a fourplex. What are your thoughts on buying something like this? Specifically is it a bad idea to purchase something that has been converted? Are there foreseeable problems? I'm in the process of checking to see if it's a legal 4plex.

One of my mentors is not keen on this kind of thing but I can't let it go just yet. The price is right and the rents are solid with year leases on everybody. I'm doing the due diligence but just keep coming back to the fact that it was built to be a double not a quad.

So what do you think???

Thanks in advance.

Ray Harrell · Answer

If it's legal and passed zoning, why not? I assume they are 4 1-bedroom 1 ba units? I'd rather lose 1/4 rent if a tenant moves from a quad than 1/2 rent if a tenant moves from a duplex.

Scott S. · Answer

Sounds great! I've seen SFHs legally converted to a duplex (or one larger unit and one smaller) so why not the same approach with a duplex?

With that unit mix, go for it if legal and the numbers work.

Andrew Marsh · Answer

Jeb, I'm looking at a Duplex right now that was built in 1924 and has previously been a Quad, then Duplex, Then Single Family, now back to Duplex. So it's a mess to understand.

I can say the biggest killer to watch out for is electricity circuits being shared between units. This will make installing separate meters a mess. Adding a meter itself to a set of breakers is not a huge cost (1-2k each), BUT if your units are sharing physical electrical wires within the walls, splitting them is going to involve ripping into the walls, and re-wiring...

The dead simple way to test this during your walk through is to see if each unit has it's own breaker box within the unit.  Go to Lowes and get a Circuit Breaker Finder for $40. It has an end you can plug into a socket in say Unit A, then use the other end to tell you which breaker that oultlet is on. You can repeat this process until you've mapped each outlet to a breaker. What you are hoping, is that at the very least, that Unit A doesn't share a breaker with Unit B. If it does, you're sharing wires in the walls.

At that point you have to decide how much $ you are willing to spend to split them. Or you pay them, and include them in rent (which I personally hate the idea of, but lots of folks do it successfully so they say on here).

Out of curiosity, would you please share the RTV for the deal your looking at?

Best of luck brother

Jeff Kehl · Answer

@Jeb Brilliant today I looked at a 'duplex' that is really a single family home with an apartment above a freestanding garage. It is going to be auctioned tomorrow and I asked the auction company representative if that was a legal use. It was a useless question I should have known better than to ask because they don't really know.

I've looked at enough of these to be able to tell you a few things but the best answer I can give to this is call the planning/inspection/building department and ask them. They may or not be right legally :)

Zoning is most important. Find out what the zoning classification of the property is and get the exact description of what that zoning classification means. Logically an area that allows a  duplex should allow a fourplex but don't assume that unless that is what it says.

If the zoning does not allow it, it does not mean it is illegal. There could have been a variance issued by the local planning commission or it may have been grandfathered if it was always that way. But make sure you have proof of that.

If you discover the current use is illegal you could still go ahead with the risk that someone could call you on it. The question here is what is the likelihood someone would complain/ a government body would act on it.

Even if the current use is illegal, all of this is a bit of a risk/return calculation. Generally if the property is being used a certain way today, not hurting anyone and you don't have enemies you will be fine.

Jeb Brilliant · Answer

Hi @Ray Harrell, happily enough it has 2 units that are 2/1 and 2 units are 1/1.

Thanks for your input.

Thoughts on buying a duplex that's been converted to a 4 unit?

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