Should I add a second story apartment?

Question

I have a small house with upstairs potential in a "good" neighborhood. Really, my interest in having an upstairs apartment would be to rent to family, but I don't want to make a terrible investment decision. What are your guys' opinions about adding an apartment to a single family home? Worth it? Curious about rental potential but I guess mostly resale potential. I know I wouldn't necessarily get back every cent I pay for the apartment if I sell anytime soon, but would I lose a lot? Thank you!!

Thomas S. · Answer

It will depend entirely on your local market. As for renting to family that would be a terrible idea. Usually does not work out well.

Al Ball · Answer

thanks Sean

Sean Walton · Answer

Hi Al,

I agree with what others have said your existing walls may not be able to support the weight of an extra floor. Not insurmountable but adds cost. Do you have an existing attic? You could probably finish that out easier and pop in some dormers.

You could also look into medium term rentals to traveling nurses, doctors, professors, business people etc. Don't formally convert to a duplex but see if there is in-law unit or accessory dwelling unit legislation that is often less stringent. May also be attractive to a multi-generational family end buyer. I would talk to a good local realtor to see if that is seen as a positive.

Also depending on your lot size you may be able to put a small in-law unit in your back yard. There are some companies making cool prefab ones that come out fully assembled just bolt it to the foundation and connect the utilities.

Al Ball · Answer

great advice, royce, thank you

Royce Talbo · Answer

@Al Ball lf you are building up and adding Sqft, then it might be worth it as it adds value.  If you are just talking about converting your existing 2nd floor to a rental, then it might not be worth it, unless you can easily convert it back to a single family later.  Most people buy houses because they want privacy, converting it into a duplex is almost like buying into a small condo.  Most people are not investors so they dont want to house hack and live with someone.Run your numbers with both, checking comps with the additional sqft and estimate the cost of construction. also run the numbers on what rents you can get and your ROI of the conversion.   Nobody will be able to tell you what is good or bad unless they are in the same neighborhood as you, as it heavily depends on your local market.  It also depends on how long you are going to hold it before you sell.  Typically what I have seen in my market is that homes with an additional in-law suite, guest house, duplex that was converted from a single family typically only go for a little more than a stand alone single family.  They are not worth 2 single family houses or 2 condo units, as they are just 1 large house with a dividing wall and extra kitchen.

Frank Chin · Answer

I would suggest you give your city a call, folks involved with zoning, to see if what you plan to do that, if zoning is allowed under zoning codes.

Where I am, there are several reasons why it might not be allowed. So if it's a one family zone, chances are conversion is not allowed. Second is one family could be built to a different standard than a two family house, would not be able to bear the weight of an additional floor.

Third is a matter of variance, and in many areas, if you do additions, change the appearance of your property, a public hearing is required, and neighbors can object and will. So a free call to your local zoning office would be best: Madison zoning. Beyond that, consulting a local architect is the next step, which may cost you some consultation fees.

Al Ball · Answer

Yes I have done this, thank you. It's possible; just trying to figure out if it's a bad idea...

Al Ball · Answer

The rental and real estate market in this area are very good. I am curious about recouping money spent on construction of this nature in the case that we decide to sell.

Should I add a second story apartment?

Most Popular Reply