Multi-family Investor · Indianapolis, IN · Member since 2013 · 96 posts · 12 votes
This might be a pretty unique question, but since I know there are several people who started their RE journeys buying a MF house and living in one of the units, I'm hoping there might be someone who can shed some light on my question.
Background: I own a triplex with legal non-conforming zoning (zoned for duplexes) that I bought with FHA financing in September 2013. I am currently living in one of the three units and have since I purchased the home. The house was originally a 4-plex with a basement unit until Indianapolis passed egress window laws. The basement does not have conforming egress windows, and was decomissioned as a 4th unit and then mostly un-finished.
My question(s): If I were to re-finish the basement, could I live in it? I understand I can't rent it out to other people because it doesn't have conforming egress windows, but if I lived in it, that would free up the totally legal unit I'm living in right now for a third tenant! Would it cause any kinds of problems, say, when I went to sell it? Would any of those problems go away if, instead of a full kitchen, for example, I just put in a mini-fridge and a microwave? Could that make it a "bonus space" rather than a 4th unit if I sell it in the future? It needs some work, but not enough to deter me if I could potentially make $500-$600 more per month off my current unit!
Does anyone know where I would start to research these questions on my own? I'd like to learn how to figure things out on my own instead of always having to hire an attorney.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
12y
Personally, I won't live in basement space without an egress window. They are in the code for a reason. All the money in the world does you no good in a pine box.
There is a reason that basements require egress - SAFETY. Do you want to be living in an unsafe unit? Would your insurance company want to insure that? Would some building inspector notice this code violation? What about getting utilities metered for this unit?
If you aren't going to make it a legal unit, don't bother.
This.
Safety.
If the place actually burned down/flooded out/etc., I would think insurance might re-think they "oh, no worries" approach and try to find a loophole so they don't have to pay your claim. Especially if anything happened in the improper basement.
How would someone notice? Utilities if there are 4 metered units. Mail. Inspectors- city and insurance folks driving by. Property taxes and square footage. Your income taxes and deducations on more units. Your mortgage lender having a problem with it. Neighbors made about 4 sets of tenants in one building complaining and ratting you out. An angry tenant you have to evict ratting you out or claiming your building has flaws to try to get out of paying rent. It's not that hard for passerbys to notice occupancy, and others can notice more easily (utility companies where there are 4 sets of utility boxes, mail people, cable installers, tenants, neighbors, city inspectors, insurance companies, etc.). But, yeah, maybe you would luck out and nothing happen to the property or with a tenant/neighbor ratting you out and no one notice. Some people have "illegal" units for years and no one notices. I would enlarge the windows and make the building up to code instead of throwing good money to finish an "illegal" space and take that risk. Or use the basement as "storage" or "laundry room" or "rec room" for all tenants... some sort of "bonus" area to try to get more rent from.
Multi-family Investor · Indianapolis, IN · Member since 2013 · 96 posts · 12 votes
12y
Jon K., did you even read the rest of the posts? As I said before, the windows are 3'x4'. Heck, they're bigger than the windows in the above-ground units. The law just specifies 15 sqft for below-ground units. The space is perfectly safe. As I also said before, the utilities are not metered separately. My mail goes to a PO Box as it is, so I don't see how that would change. The square footage changes as soon as I finish the space, whether or not I actually live in it. Plus, it's not like we're talking about a dozen extra people here. The unit I'm talking about renting out that I'm living in now is small. 550 sqft. Since it's one bedroom, I can limit the occupancy to two people. That's hardly a crowd. And I can't legally add a 4th unit even if I do finish the room out to code because it's only zoned for two units and was grandfathered in with three, but cannot be increased to four. But I really feel like I'm repeating myself.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
12y
@Lindsay Wilcox if you do something illegal with a property the way you get caught is when you get xways with a tenant or former tenant (ie. deduct damages from SD at move out). They report you and then the ... hits the fan.
@Lindsay Wilcox if you do something illegal with a property the way you get caught is when you get xways with a tenant or former tenant (ie. deduct damages from SD at move out). They report you and then the ... hits the fan.
Bingo.
But she seems not to want anyone's advice or warnings here. Hopefully she won't get caught with an 'illegal' unit where the **** hits the fan. Illegal units are just that-- illegal units-- no matter how big "you" think a window is or not, you're still not having a legal unit with this. And you're violating zoning if you've not allowed a fourplex.
That's hardly a crowd. And I can't legally add a 4th unit even if I do finish the room out to code because it's only zoned for two units
Did *you* read our posts?
So, you're zoned for 2 units, but now you're trying to make 4 units...
Correct, you can't legally add a 4th unit here--- and your 3rd unit is also not a legal unit. Good luck with your 2 out of 4 illegal units.
You best hope a tenant situation doesn't go south and rat you out. Half your units are not *legal* units, and you're violating zoning LAWS and safety LAWS re: windows.
Multi-family Investor · Indianapolis, IN · Member since 2013 · 96 posts · 12 votes
12y
For Pete's Sake, Jon K., have you missed the several times I've mentioned that the third unit has "LEGAL non-conforming zoning" status? Please don't just talk over the thread. Either join the conversation by actually reading the rest of the conversation or stay out of it. What you're doing is just rude.
The essence of what I keep trying to ask is specifically about the fact that the space I'm talking about finishing in the basement wouldn't be a "unit." It'd be an additional space in the house, but without a kitchen or bedroom, it's not a "unit." It's just a couple extra rooms, potentially even with access to one of the other units, that I would happen to live in.
The question is: Is it *legal* for me to live in a space in the house that is NOT a "unit" in the house?
From what I can tell, the answer is, "Yes, definitely, as long as it's accessible from one of the other units, because then I'm actually living in one of the already-existing units and just renting out most of that unit to a roommate I rarely see and can lock me out of his/her part of the space," but no one has actually answered the question about whether it's legal if the only way to access it is from outdoors.
Investor · Delaware, OH · Member since 2013 · 224 posts · 64 votes
12y
Lindsay - You should consult with a local attorney. But still the answer is "no" to the question of whether you can legally live in the basement. No. You can think of 100 ways to game the system, but based upon the information you have provided, the answer is No. I think that's what everyone on here is trying to say. No.
How can you make it legal to UTILIZE the basement as living space? You need to make it part of an existing unit - via door, trapdoor, trapeze, firepole. beanstalk - it cannot exist as a standalone unit. So it's the basement to Unit 3. Great. Now you can legally use the basement as extended space to Unit 3.
It is not legal, by your own facts provided, to use it as a bedroom. It does not meet the egress requirements you identified as being necessary to be a bedroom - the window does not meet code. So you can visit the basement, watch tv in the basement, knit afghans in the basement - but based upon the egress requirements you defined, it cannot legally be used as a sleeping area.
So, if you do as you propose, and the housing police show up, you can try to sell them a story that you are not actually using the basement as a bedroom, and you really sleep on the couch upstairs, and you only visit the basement to assemble puzzles and play solitaire. That is your prerogative. But it's still a lie - and you're lying because it's not legal to use the basement as a bedroom.
The question you are really asking: Can your lie successfully evade housing laws and building codes? You aren't going to fool anybody. If you are called into housing court (or whatever it is) and you tell the truth when asked if you are treating the basement as a bedroom - you will be told you are in violation of the code.
If you disagree with this assessment, you should consult with your attorney. But again, I will reiterate - No, based upon the egress laws you provide, it is not legal for you to use the basement as a bedroom.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
12y
@Jon K. said "I would enlarge the windows and make the building up to code instead of throwing good money to finish an "illegal" space and take that risk." Ding! Ding! Ding!
For Pete's Sake, Jon K., have you missed the several times I've mentioned that the third unit has "LEGAL non-conforming zoning" status?
The essence of what I keep trying to ask is specifically about the fact that the space I'm talking about finishing in the basement wouldn't be a "unit." It'd be an additional space in the house, but without a kitchen or bedroom, it's not a "unit." It's just a couple extra rooms, potentially even with access to one of the other units, that I would happen to live in.
The question is: Is it *legal* for me to live in a space in the house that is NOT a "unit" in the house?
From what I can tell, the answer is, "Yes, definitely, as long as it's accessible from one of the other units, because then I'm actually living in one of the already-existing units and just renting out most of that unit to a roommate I rarely see and can lock me out of his/her part of the space," but no one has actually answered the question about whether it's legal if the only way to access it is from outdoors.
Um. You are in non-comforming zoning for unit 3. How are you suggesting a unit that violates zoning is a legal unit?
People have already told you a hundred times that NO, it is not "legal" for you to live in an "illegal" unit that also violates zoning.
You're living in an illegal basement unit that violates safety LAWS and violates zoning LAWS. Your *view* of these laws is irrelevant; these laws are the zoning laws and housing code laws. And, you are violating them. What you have is a basement that you want to live in-- that violates zoning laws, safety laws, and is not legally a legal space.
The unfinished basement that you're suggesting LIVING in makes it a UNIT.
Kitchen or bedroom or not, it's a unit as it's detached from the other units (that is NOT a roommate situation). A studio apartment doesn't have a bedroom, but it's STILL A UNIT. Why is it a unit? Because it is a detached space that someone is LIVING IN.
A UNIT does NOT have to have a kitchen or bedroom to be considered a UNIT.
And, your UNIT (YES, it IS A UNIT... a detached kitchen-less bedroom-less UNIT that you are living in) violates safety laws, zoning laws, does not have LEGALLY required window space, violates your 2 ZONED property laws, doesn't meet property code LAWS. I shall repeat, even though you don't want to read any facts on this site. A UNIT is a detached property in which someone lives... like your unfinished basement. You have a 4th UNIT that violates safety laws and zoning laws. Yes, it's a unit. No, what you're suggesting is not legal.
Everyone here has answered what you're "asking" with a resounding NO. It's NOT a legal unit. NO, it's not a legal unit. NO, it doesn't meet zoning laws. NO, it's not a roommate situation. NO, what you're suggesting to do isn't legal in terms of safety/housing laws and zoning laws. Your answer is.... N-O. NO.
Maybe you'll get away with it, and maybe you won't. Like I said, just hope your tenant situation doesn't go south and your tenant rats you out to zoning.
If the only way you can access the unit is outside, then no, that's not a roommate situation-- nor does it fix your illegal, unzoned unit.
The basement would have to be connected to unit 3 INSIDE to be unit 3's connected basement- even then, try telling the courts that "oh, I'm sleeping in my unzoned, "illegal unit" basement and have a roommate upstairs with no way for the "roommate" to access my space" when a tenant tries to sue you or the property has some insurance claim. Non-connected units are not roommate situations, and you know it. You're trying to game the system, obviously, and no, your "oh, my roommate lives upstairs.... our units just aren't attached" is not true in terms of legally, zoning, insurance, or any other way. Otherwise, um, I would have a "roommate" that lives in my property so I could avoid paying rental property tax rates. What you're suggesting is not the legal way that things work, and you know it. A few dozen people here have already told you that what you suggest is not the legal unit nor zoning way that things work.
You can make up all the tales about your unit that you want, but the 4th UNIT is an unfinished basement that is not a legal unit and that violates safety laws.
In your theory, I could probably sleep in my car down the street and "not have to pay" property taxes on my home. Ha. One could only dream like you're suggesting, but no, again, no, what you're suggesting is not legal. It's an illegal, improperly zoned unit that violates code. Not legal. There's your answer. Again.
@Jon K. said "I would enlarge the windows and make the building up to code instead of throwing good money to finish an "illegal" space and take that risk." Ding! Ding! Ding!
And you refuse to do it because.... ?
Exactly.
The latest the OP said was that their property is zoned for only 2 units. They already have 3 units they're trying to rent out-- plus they want to live in the 4th unit themselves (unfinished basement). They're violating zoning-- I'm guessing that's why she doesn't want to, and perhaps can't. make 2 of her 4 units legal. The OP is already taking a risk renting the property out as 3 finished units when the property is only zoned for 2 units.
Throwing good money after bad with the unfinished basement and taking legal risks here, isn't it?
Lindsay - You should consult with a local attorney. But still the answer is "no" to the question of whether you can legally live in the basement. No. You can think of 100 ways to game the system, but based upon the information you have provided, the answer is No. I think that's what everyone on here is trying to say. No.
How can you make it legal to UTILIZE the basement as living space? You need to make it part of an existing unit - via door, trapdoor, trapeze, firepole. beanstalk - it cannot exist as a standalone unit. So it's the basement to Unit 3. Great. Now you can legally use the basement as extended space to Unit 3.
It is not legal, by your own facts provided, to use it as a bedroom. It does not meet the egress requirements you identified as being necessary to be a bedroom - the window does not meet code. So you can visit the basement, watch tv in the basement, knit afghans in the basement - but based upon the egress requirements you defined, it cannot legally be used as a sleeping area.
Bingo.
A tenant could have a field day sueing the OP for a property not up to code, and one that doesn't meet zoning requirements on top of that. Unit 3 and the basement would have to be attached inside, without a bean bole, of course. Gaming the system without playing by the game rules will only get you forfeited.