Walk-out basement househack in Durham NC

[Annchen Knodt]

Hi BP, I'm looking to connect with other investors who have experience converting a walk-out basement in a SFH into an ADU for house-hacking, especially in the Raleigh/Durham areas in NC. I'd love to purchase a house where I can live on the main level and rent out the bottom level / basement, ideally as a short term rental / AirBNB, but also potentially as long- or mid-term rental as backup strategies.

My main questions for this are:

* How do I get all the information that I need on regulations, both for code in converting the basement (e.g. if I need to add a kitchen, move the laundry area, etc) as well as for occupancy (e.g. do i need multifamily zoning etc) and STR regulations. Do I just contact the city?

* Exit strategy: I hope to repeat this process, i.e. move out in a year or so and purchase another house hack while renting the first one out. I'm trying to think about whether it would work best to then rent out the top and bottom units separately via STR and/or LTR, or perhaps rent out the whole house?

* Are there any areas of Durham that are more or less conducive to this strategy? (in particular, STR demand)

Thanks for any advice - always love connecting with other investors!

[Katherine Serrell]

Hi Annchen! Just PM'd you. I am an investor in Raleigh and have both short-term rentals and long-term rentals that I aquired all via househacking. 

I can definitely offer some insight as far as exit strategy because I have done this 3 times over the last 3 years with my units. To repeat the process, you have to be really careful with the lending and some nuanced tax issues that also impact the lending component. Id love to talk through some options with you and what worked for me.

[Zambricki Li]

I've done this in Asheville, NC.  Decide 1st if you need to permit it or if it is a "granny flat" you are creating as a homeowner. The difference in many city code is the size of the kitchen sink in the granny flat. May save you a ton of money and time in permitting. That is in context of a househack, it will not be added to your square footage unless you permit it. Some basements were already partially permitted square footage, if it had been used as a laundry/rec room by previous owners. If not adding that added square footage will give you a boost when you go to refinance. Find a prop that already has a basement egress installed and ideally code egress window where bedrooms wil go, those two things are expensive excavations if you are below grade. The small basement windows won't cut it for fire code. 
 

[Mitch Davidson]

Hi @Annchen Knodt. Sounds like @Katherine Serrell has some solid advise to offer. I'm happy to add some additional lending planning thoughts. You definitely want to be thinking of properties 2 and 3 when working on property 1. 

[Annchen Knodt]

@Katherine Serrell @Zambricki Li @Mitch Davidson Thank you all for the insights! We ended up snagging a basic SFH that popped up and seemed like we could get a great deal, but will def be looking to house hack the next one in a year, so I may reach out for further advice on planning. Mitch I definitely know what you mean about loan planning, have started to feel that already and I'm sure I can better optimize!