Purchased a Triplex Zoned SFR

[Brian Hartman]

I made a mistake!

My wife and I recently purchased our first small multifamily property which is our 5th rental real estate purchase in the past four years. The property seemed to match all of our criteria and gross rents are $3,200/month on a $225,000 total investment. We really want to hold onto this property, but when we went to refinance we are finding out that the property was actually zoned SFR although it has operated as a triplex for 20+ years from what I have gathered. Now the lender I love working with says this is going to be a hard stop for anyone lending long term on the property. I have checked with the local city zoning and they have said there is no way it would pass through the zoning committee as a multifamily property.

I am posting this for two reasons.

1.  To try to make sure no one makes the same mistake I did in the future

2.  If anyone has any ideas on how I can refinance this property and pull my cash out.

Thank you for any help that you can provide!

[Austin F.]

Could it have been grandfathered in? I would try again with the zoning folks, but you also don't want to bring code enforcement down on you so be mindful of that.