Can I get tenants for a multifamily in my area?

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Can I get tenants for a multifamily in my area?

Jessica Long
Member since 2021 · 27 posts · 4 votes

We have a SFH that we are considering converting into a duplex (it is a split level with a walk out basement). The numbers absolutely make sense to convert it as far as typical rental for the units for our area.

My main question is how to analyze my area to see if we would be likely to fill the top unit (how do I know families/indiv. would want to rent a home with a basement unit attached). The upstairs is a 4 br, 2 bath, 2 level, open floor plan, large eat in kitchen etc...Not a small space. I have heard from some re agents that families are turned off by units that have an attached unit. Any advice on how to figure this out? I thought about listing it to see the interest level making it clear that it will be the upstairs portion of the home for rent only and that there is a separate basement unit. The basement unit cannot support the whole structure if we want it to cash flow. We need to try to keep both units filled if we can. 

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
4y
Quote from @Jessica Long:

@Joshua Messinger and @Taylor J McGuire thank you so much! Your help is invaluable. I am learning something new everyday about this business. If I am doing this correctly, my research shows that our area has a projected employment growth rate of 34% over the next 10 years (I checked here for this info: Economy, bestplaces.net - are there better ways to find this out?). We have a variety of job industries in the area (hospital, NASA, lots of government jobs), short metro ride to downtown Washington DC, lots of parks and convenient shopping, otherwise, our area is a pretty typical suburb neighborhood. This would be a LTR but are open to STR for the basement unit. It is pretty hard to find SF rentals in our exact area (like under 10 in our zip code)- not a whole lot of options for bigger homes especially so we might have the advantage in that for now. Thanks again! I will look closer at the numbers. I think if it were a SF rather than a duplex we would have no trouble filling it. We are at the crossroads now-to renovate or leave as is. It's about an $800 difference in cash flow so pretty significant. For our investment plan to cash flow it works best as two units (but only if we can fill both barring the 5% vacancy rate for our area).


 Where is the property exactly? Most places in the DC metro area do not allow you to just convert your property to a duplex.

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  • Joshua MessingerBusiness Member
    Property Manager · Poconos, PA · Member since 2020 · 443 posts · 264 votes
    4y

    Hey @Jessica Long! 

    You can check the occupation rate of the area by doing a search on Airdna. Other than that - What is the employment growth in your area like? What attractions/landmarks are nearby? Are there any things that make your area unique to others? Are you trying to use this property as an STR, or LTR?

    If I can help in any other way please don't hesitate to reach out! 

    Best of luck, 

    Josh

    [email protected]484-986-5012
    0Reply
  • Taylor J McGuire
    Member since 2021 · 11 posts · 5 votes
    4y

    Definitely what Joshua said, also what's the rental market look like? Search for rentals in your area and see what's available, people need a place to live. If the choice is homeless or your situation most people would go with your rental as a better option. Make it as comfortable as possible and walk through as a tenant and fix the things you wouldn't like. 

    1Reply
  • Jessica Long
    OP
    Member since 2021 · 27 posts · 4 votes
    4y

    @Joshua Messinger and @Taylor J McGuire thank you so much! Your help is invaluable. I am learning something new everyday about this business. If I am doing this correctly, my research shows that our area has a projected employment growth rate of 34% over the next 10 years (I checked here for this info: Economy, bestplaces.net - are there better ways to find this out?). We have a variety of job industries in the area (hospital, NASA, lots of government jobs), short metro ride to downtown Washington DC, lots of parks and convenient shopping, otherwise, our area is a pretty typical suburb neighborhood. This would be a LTR but are open to STR for the basement unit. It is pretty hard to find SF rentals in our exact area (like under 10 in our zip code)- not a whole lot of options for bigger homes especially so we might have the advantage in that for now. Thanks again! I will look closer at the numbers. I think if it were a SF rather than a duplex we would have no trouble filling it. We are at the crossroads now-to renovate or leave as is. It's about an $800 difference in cash flow so pretty significant. For our investment plan to cash flow it works best as two units (but only if we can fill both barring the 5% vacancy rate for our area).

    0Reply
  • Taylor J McGuire
    Member since 2021 · 11 posts · 5 votes
    4y
    Quote from @Jessica Long:

    @Joshua Messinger and @Taylor J McGuire thank you so much! Your help is invaluable. I am learning something new everyday about this business. If I am doing this correctly, my research shows that our area has a projected employment growth rate of 34% over the next 10 years (I checked here for this info: Economy, bestplaces.net - are there better ways to find this out?). We have a variety of job industries in the area (hospital, NASA, lots of government jobs), short metro ride to downtown Washington DC, lots of parks and convenient shopping, otherwise, our area is a pretty typical suburb neighborhood. This would be a LTR but are open to STR for the basement unit. It is pretty hard to find SF rentals in our exact area (like under 10 in our zip code)- not a whole lot of options for bigger homes especially so we might have the advantage in that for now. Thanks again! I will look closer at the numbers. I think if it were a SF rather than a duplex we would have no trouble filling it. We are at the crossroads now-to renovate or leave as is. It's about an $800 difference in cash flow so pretty significant. For our investment plan to cash flow it works best as two units (but only if we can fill both barring the 5% vacancy rate for our area).


     Of course! 

    I figure remodeling/repairs as cash on cash return. Example. 

    $2000 of work allows increased rent of $200 per month = 10% cash on cash return. So if you have to remodel to make the deal work that's fine, just figure in the cost and time correctly! 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y
    Quote from @Jessica Long:

    @Joshua Messinger and @Taylor J McGuire thank you so much! Your help is invaluable. I am learning something new everyday about this business. If I am doing this correctly, my research shows that our area has a projected employment growth rate of 34% over the next 10 years (I checked here for this info: Economy, bestplaces.net - are there better ways to find this out?). We have a variety of job industries in the area (hospital, NASA, lots of government jobs), short metro ride to downtown Washington DC, lots of parks and convenient shopping, otherwise, our area is a pretty typical suburb neighborhood. This would be a LTR but are open to STR for the basement unit. It is pretty hard to find SF rentals in our exact area (like under 10 in our zip code)- not a whole lot of options for bigger homes especially so we might have the advantage in that for now. Thanks again! I will look closer at the numbers. I think if it were a SF rather than a duplex we would have no trouble filling it. We are at the crossroads now-to renovate or leave as is. It's about an $800 difference in cash flow so pretty significant. For our investment plan to cash flow it works best as two units (but only if we can fill both barring the 5% vacancy rate for our area).


     Where is the property exactly? Most places in the DC metro area do not allow you to just convert your property to a duplex.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    1Reply
  • Jack Seiden
    Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 654 votes
    4y
    Is it zoned multi family? If not you cannot legally convert it. However many investors employ rent by the room in the D.C. area to get returns as good as if not better then multi family’s.
    1Reply
  • Brian Hughes
    Seattle, WA · Member since 2017 · 275 posts · 223 votes
    4y

    and even if full on duplex conversion isn't possible, adding an ADU may be legal. Functionally almost the same thing, but the ADU may have slightly fewer requirements as far as things like separated utilities. (but thats a good thing to do if you can anyway, at very least for electricity and gas. Just be aware some areas ADUs arent legal at all, some they are but have too many rules to be viable, and one common rule in areas that aren't big on densification is that owner must occupy one of two units, e.g. both cannot be rented.

    1Reply
  • Jessica Long
    OP
    Member since 2021 · 27 posts · 4 votes
    4y

    @Russell Brazil How would I find out if converting to a duplex is legal in my area?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y
    Quote from @Jessica Long:

    @Russell Brazil How would I find out if converting to a duplex is legal in my area?

    Tell us the area its located and I can tell you.

    But based on your description of it being a "short metro ride to DC"....I can tell you there is no place on the metro in the DC suburbs that allows that. 
    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
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  • Jessica Long
    OP
    Member since 2021 · 27 posts · 4 votes
    4y

    @Russell Brazil it's in the 20706 zip code. There are a lot of homes that do it here though not sure if they are allowed. The area is an unincorporated city. 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y
    Quote from @Jessica Long:

    @Russell Brazil it's in the 20706 zip code. There are a lot of homes that do it here though not sure if they are allowed. The area is an unincorporated city. 

    Nope, not allowed in PG County 
    [email protected]301-893-4635Podcast Guest on Show #192
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  • Justin Lanciault
    Realtor · Washington, DC · Member since 2018 · 166 posts · 88 votes
    4y

    @Jessica Long I have helped many clients buy homes with a 2nd kitchen/in-law suite in the basement in that zip and others all around Maryland. Most Maryland counties in the DC metro allow for 2 kitchens in a property per zoning, but this is not the same as converting it to a duplex.

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