Need Tips: Subdividing 3700 sq ft Home into 4 Apartments

Member since 2019 · 7 posts · 2 votes

I'm a first time home-buyer and I am on the market for my first investment property but have a lot of competition with cash investors. So I'm changing the game plan to purchasing a single family property that is large enough for me to convert into four units. I am going in with an FHA 203k loan to purchase it. As a first timer, I have tons of questions on what to expect price wise, and how to do it especially since the property has central air so I have to separate the system into different zones for each apartment to have their own control and for billing purposes. Any advice, tips, stories of experiences are more than welcome!

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Jared W SmithBusiness Member

Architect · Westchester County, NY · Member since 2018 · 681 posts · 476 votes

@Jasi Edwards You'll run into several problems with your plan. The first and probably the most important is ZONING. Though there may be exceptions, in most suburban or semi-urban cities, you will not find many single family homes in a 4-family zone. 4-family will likely be near small apartment buildings (5+ units). You will have to check your zoning first.

Then next, is this economically feasible? Each of the four units will have to be sealed and fire separated from the others. Then there's emergency egress and light/air requirements for bedroom/living spaces. The single family home will have to have it's layout completely redone. Ideally this would mean that this single family house would need to be a large 3 floors plus basement with ample space for the aforementioned as well as units which aren't 'weird'.

All of this is complex and will be costly. I would not recommend this for a first timer unless you have construction experience and prior experience with a local Architect to assist.

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Jacob Murphy
Contractor · Cincinnati, OH · Member since 2015 · 92 posts · 75 votes
7y
First of all, good luck because you will learn a ton if you go this route. I would recommend getting a freelance architect who is experienced with this kind of work to streamline you through the building department and permit inspections. That has absolutely been the worst part for me in real estate! I can't stand being held up by government.
Now as for considerations of how you do the rehab, you might as well do it right the first time and make everything separate to keep more cash flow in your pocket and increase the value on sale at some point in the future.
1. Electric: I recommend doing separate electric panels for each unit. Plan on no gas lines at all in the building. Install separate electric hot water heaters. If you are a nice landlord you can buy the heat pump units to lower the cost to the tenants and they also last much longer.
2. HVAC: Install HVAC Ductless Mini Split systems for each unit. Mini splits are amazing because you avoid running ductwork through the walls and ceilings, huge time saver. They do both heat and A/C so the tenant is now paying for all HVAC needs.
3. Plumbing: I would plumb the units with Pex supply lines because they are much more likely not to burst if they freeze. Install them so that you can submeter the water usage and back charge the tenants if you so choose to do so.
4. Cabinets: Install all wood cabinets. Place a water alarm under every sink.
5. Flooring: Do it so you never have to fix them again. If there is already hardwood, refinish with 3 coats of polyurethae. Anything else I would buy 4.5mm thick LVT wood plank flooring (about $2.25/sq ft at home depot). It is waterproof and will last 15 years of tenant abuse.
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Robert Borr
Attorney / Broker · Member since 2018 · 29 posts · 30 votes
7y
@Jasi Edwards consider seeking out a local real estate attorney or broker who is knowledgeable of the zoning regulations to see if this is feasible in your area. Also, double check with your lender because FHA does not typically loan on investment properties.
This is not legal advice and does not create an attorney client relationship.
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Jasi Edwards
OP
Member since 2019 · 7 posts · 2 votes
7y
@Jacob Murphy Thank you! I have an architect that is coming with me to look at the property this weekend; excited about that! I love the recommendations! Especially having all of the units running on electricity instead of gas. I never thought of water alarms either, that's a great one! I will see if I can fit all of these things into the renovation loan for sure!
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Jasi Edwards
OP
Member since 2019 · 7 posts · 2 votes
7y
@Robert Borr Technically, it's not an investment property, as I will be living in one of the units so it will be my primary residence. In the future, it will solely become an investment property as I don't plan on living there forever as I am aspiring to be an investor and purchase properties to rent out. Therefore, my FHA loan technically covers investment properties as long as it will be my primary residence for at least 12 months. But thank you, I will check with my agent on the zoning as well. I spoke to her about it yesterday and she didn't say that there's any restrictions, however I will check into it thoroughly through the city.
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Jared W SmithBusiness Member
Architect · Westchester County, NY · Member since 2018 · 681 posts · 476 votes
7y
@Jasi Edwards You'll run into several problems with your plan. The first and probably the most important is ZONING. Though there may be exceptions, in most suburban or semi-urban cities, you will not find many single family homes in a 4-family zone. 4-family will likely be near small apartment buildings (5+ units). You will have to check your zoning first.
Then next, is this economically feasible? Each of the four units will have to be sealed and fire separated from the others. Then there's emergency egress and light/air requirements for bedroom/living spaces. The single family home will have to have it's layout completely redone. Ideally this would mean that this single family house would need to be a large 3 floors plus basement with ample space for the aforementioned as well as units which aren't 'weird'.
All of this is complex and will be costly. I would not recommend this for a first timer unless you have construction experience and prior experience with a local Architect to assist.
Architect Owl PLLC521 Reviews
Website View Page
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Justin Kane
Specialist · San Antonio, TX · Member since 2015 · 909 posts · 297 votes
7y
assume 20-40$ per sq ft for the work plus meters that even if your house is properly zoned for density
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