Does anyone have any experience renting a split level home separately like a duplex? I can think of numerous reasons why it wouldn't work but I wanted to see if anyone has. If so, what was your sucsesses and short comings? Thank you for your time.
Hi Joe, I don't have experience renting a split level house but some potential issues (that you've probably already thought about) might be:
-no separate meters/utilities so would you pay utilities?
-separate zones for heat/AC?
-how to physically divide the space (legally)
-parking if the driveway is narrow so tenants will block each other in.
I do have a townhouse with a 1 bedroom/1 bath "lockout" that is rented separately. I pay utilities which I hate doing but the increased rent makes it worth it.
If it is not zoned as a two family that is an issue. I see people do it but the town can sometimes have a problem with this. Also the town often will not allow a kitchen in the lower level.
Utilities is a huge issue. For your townhouse, do you pay both tenants utilities due to lack of separate metering or just for the 1/1? What does "lockout" refer to? Thank you for your response.
The city/county will let you do the ADU (auxiliary dwelling unit) if it meets the guidelines/permit process. The big catch is that at no point you are allowed to rent both sides. You must sign an agreement stating you will have one side as your personal residence and at no point in time rent both sides. The penalty is not very clear. Thank you too for your response.
I'm not sure about the exact definition for "lockout" but in my case, it has a separate entrance to the outside but also can be connected to the main unit through a door. Kind of like on some adjoining hotel rooms that can be combined if both sides open the doors. I'm paying utilities for both since it's one meter. We put language in lease about "excessive" utility bills but it's still not ideal. Purchased for 60k put 11k into it and rents for $800 (main 3bd/2bth) and $450 (1bd/1bth lockout) so I should have enough cushion for high summer electric bills.
Zoning and fire code are your biggest issues.
If the property is not zoned for two units - either an auxiliary apartment or a duplex - you will not be able to pull permits to install a kitchen on the lower level(s). Here, in the case of an auxiliary apartment (i.e. Granny Suite), the owner must reside in one of the two parts of the dwelling - otherwise you have a duplex on your hands.
If the house was not built with the intention of two separate units, there will not be proper fire separation between the levels - this you will have to rectify to make a legal duplex.
Not having separate meters is an economic deterrent, but it is a non-issue if the above cannot be satisfied.
My dad has split units in every which way to make more, specifically for campus housing. It can work, but make sure you're in a tight market. You also have to consider zoning and permit requirements, utilities (either separating them out or going all bills paid) and awkward layouts. Usually, I would recommend against it.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!