What's the best option in my situation?

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What's the best option in my situation?

Hussain Raza
Member since 2020 · 4 posts · 0 votes

I'm a property owner in Philadelphia who purchased a triplex, only to discover it wasn't zoned for that purpose. As a newcomer to the market, I inherited some challenging tenants and had to deal with a "make safe" violation. Now, I'm trying to apply for a rental license, but the city is requiring me to go through zoning because there's no proof the property was previously used as a multi-unit dwelling.

I'm torn between registering the property as a 2-unit or 3-unit dwelling. For 2 units, I'd use the 1st and 2nd floors. For 3 units, I'd use the basement, 1st floor, and 2nd floor (not 3rd floor, assuming it's a typical 2-3 story building). Is it possible to get approval for 3 units in Northeast Philadelphia?

I've consulted a lawyer who estimates the cost for 2 units to be around $5,000. An expediter I spoke with thinks they can apply for 3 units and estimates the cost to be around $8,500. What's the best course of action?

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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Hussain Raza:

I'm a property owner in Philadelphia who purchased a triplex, only to discover it wasn't zoned for that purpose. As a newcomer to the market, I inherited some challenging tenants and had to deal with a "make safe" violation. Now, I'm trying to apply for a rental license, but the city is requiring me to go through zoning because there's no proof the property was previously used as a multi-unit dwelling.

I'm torn between registering the property as a 2-unit or 3-unit dwelling. For 2 units, I'd use the 1st and 2nd floors. For 3 units, I'd use the basement, 1st floor, and 2nd floor (not 3rd floor, assuming it's a typical 2-3 story building). Is it possible to get approval for 3 units in Northeast Philadelphia?

I've consulted a lawyer who estimates the cost for 2 units to be around $5,000. An expediter I spoke with thinks they can apply for 3 units and estimates the cost to be around $8,500. What's the best course of action?


 I would go with 3 units as the cost will pay for itself quickly over time.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Hussain Raza:

    I'm a property owner in Philadelphia who purchased a triplex, only to discover it wasn't zoned for that purpose. As a newcomer to the market, I inherited some challenging tenants and had to deal with a "make safe" violation. Now, I'm trying to apply for a rental license, but the city is requiring me to go through zoning because there's no proof the property was previously used as a multi-unit dwelling.

    I'm torn between registering the property as a 2-unit or 3-unit dwelling. For 2 units, I'd use the 1st and 2nd floors. For 3 units, I'd use the basement, 1st floor, and 2nd floor (not 3rd floor, assuming it's a typical 2-3 story building). Is it possible to get approval for 3 units in Northeast Philadelphia?

    I've consulted a lawyer who estimates the cost for 2 units to be around $5,000. An expediter I spoke with thinks they can apply for 3 units and estimates the cost to be around $8,500. What's the best course of action?


     I would go with 3 units as the cost will pay for itself quickly over time.

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  • Kevin MoyerBusiness Member
    Property Manager · Philadelphia, PA · Member since 2019 · 269 posts · 301 votes
    1y

    @Hussain Raza just keep in mind there are other potential hurdles in moving from a duplex to a triplex that may go beyond zoning. There doesn't seem to be 100% consistency in what L&I will require for a retrofit conversion from duplex to triplex- but you can at least count on a requirement for a fire alarm system (possibly monitored 24/7) and potentially a fire sprinkler system. I recommend you ask your zoning attorney if it's possible L&I makes you jump through these hoops to get your CO so you can more accurately predict the time and cost and make a fully informed decision. 

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  • Sheryl Sitman
    Rental Property Investor · Philadelphia, PA · Member since 2015 · 476 posts · 360 votes
    1y

    @Hussain Raza  these licensing and zoning laws in Philly are tough to navigate. It's good you have expert help now. But clearly there is not a definitive answer so gathering the wisdom of the crowd is a great idea. I run a group of Philly landlords and if you post there as well, you will get some good crowdsourcing and ideas. Feel free to reach out for that.

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  • Alan AsriantsBusiness Member
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    Hey Hussain, looks like your are another unfortunate victim in this matter. I see the common mistake that is extremely avoidable in Phila, and anywhere else really. That is due diligence of the zoning. In Phila, triplex zoning is even more stringent and a good agent should have caught this. In order to have a legal 3 unit or any multi family for that matter, you need to make sure that the seller delivers a certificate from L&I that shows the property's current use. If the property is located in a single family zoning overlay you need to be extra cautious and have the seller provide you with an ACTIVE RENTAL LICENSE showing 3 units. Even if its a duplex, triplex or quadplex I always verify that it has an active rental license and an L&I cert that shows the proper unit count. I will even pull up property records that state how the property was built or if there is paperwork to show the conversion. 

    If the home is in a single family overlay and 3 years has passed and it has not been used as a multi family than you can lose your variance of the proposed multi family use. it is likely in your scenario it was illegally marketed as a multi family, or the seller did not maintain a rental license for a period of 3 years or more and you lost your variance. 

    I would continue with a zoning attorney for this case and try to get the city to issue you a rental license for 3 units. But be prepared to make changes to the property and possibly add a sprinkler system, this might be very cost intensive. Sorry to see you in this situation, but the only way through is through

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