Turning single-family to Duplex

[Jorge Esteban Vargas]

Hello everybody, we have a 5bed/3bath single-family investment property in Forest Park, GA and my wife and I know that our zoning area allows duplexes. Since we have some land behind our property, we're thinking about converting the house into a duplex by building a second unit in the back. Does anybody know of any lenders that will work for this specific type of project? I spoke with a hard money lender but they'd lend to only experienced flippers. Here's some additional info: we rent each room individually and have been doing great and people always ask if we have any additional houses/rooms in the area so we would love the second unit to be either 4beds/2baths or 6 beds/3baths.

[Mike Wood]

@Jorge Esteban Vargas Unless your talking about a smaller addition, where it can be founded by a HELOC or second mortgage, its unlikely that you will find a lender willing to do this deal, if you already have a mortgage on the property. For construction loans, I cant image a bank that would not need to be in first position, which would require the original mortgage to be cleared. Banks see construction loans as highly risky, and not being in first position on the deed would likely be a deal killer.

Second, most building codes require duplex houses to be attached to each other. Normally, you can NOT have a completely separate building as the second unit. ADU's are different and typically can be completely separate structures.

Sounds like your running a boarding house, and would likely run into issues with zoning.  If you were able to build another 6 bedrooms, you could potentially have 11 different renters.  My guess is your local zoning would not allow this. Check your city, but my guess is duplex zoning would not allow a boarding house.