Single Family Triplex Situation Help?

11 Replies

Hey Guys! I have verbally accepted an offer on a unique house. It is technically a single family home but built in a unique way to where 3 sections of the house have there own exterior entrance, kitchen, private bathroom/bedrooms. The sections have doors between each one that when locked, separates them from each other. There is just one electric meter for the house.

Additionally, it has a boat lift on a river that leads to the ocean, a 3 car garage, and extra land with RV connections already in place. It is also zoned R2 so potential to build another separate unit from what I understand. I intend to live in one section and rent out as much of everything else I can. What would be your strategy? All inclusive yearly leases, short term vacation leases, Airbnb (all normal in the area)? Are there any laws, insurance, or tax implications I should consider? I just want to make sure I won’t run into any surprises down the line. I am going to be getting a conventional loan with about 20% down. It’s about 700k so being considered a single family home, loan limitations prevent me from putting down much less. I appreciate all your help!

Make sure an appraiser is going to consider this single family. My brokerage is selling a similar property and the first appraiser refused to complete the report because he deemed it a multi-family property because of the separate entrances to each unit. Split utilities also makes a property being "single family" a hard sell.

Originally posted by @Willem Nichols :

Hey Guys! I have verbally accepted an offer on a unique house. It is technically a single family home but built in a unique way to where 3 sections of the house have there own exterior entrance, kitchen, private bathroom/bedrooms. The sections have doors between each one that when locked, separates them from each other. There is just one electric meter for the house.

Additionally, it has a boat lift on a river that leads to the ocean, a 3 car garage, and extra land with RV connections already in place. It is also zoned R2 so potential to build another separate unit from what I understand. I intend to live in one section and rent out as much of everything else I can. What would be your strategy? All inclusive yearly leases, short term vacation leases, Airbnb (all normal in the area)? Are there any laws, insurance, or tax implications I should consider? I just want to make sure I won’t run into any surprises down the line. I am going to be getting a conventional loan with about 20% down. It’s about 700k so being considered a single family home, loan limitations prevent me from putting down much less. I appreciate all your help!

"Unique" house is never good from and appraiser's or lender's perspective.

You first have to make sure the renovations that were done to the house to make it feel like a 3 unit were permitted, see if any internal obsolescence was created when the "apartments" are closed off etc... and then see what the zoning will allow.  Ask your Realtor if there are any comparables with that many kitchens and bathrooms.

If I was young and single and had a house that was set up like that in that kind of location, I'd AirBnB it all day long.

I have one of those under contract also.  A big house the previous owner divided into 3 separate apps.  I plan on airbnb the top floor, right now the entrance to upstairs is inside the house down a long hallway, so I'm going to have steps and a small deck so guests can access from outside.  The electric is already separated into 3 meters plus a extra meter just for the water heaters that I will pay, of course I will pay the airbnb one as well.  If the area supports it, I will also airbnb the 2 downstairs units.  For now they are both going to be long term.  My place is zoned commercial and I wish it had RV spots, garages and a way to the ocean.  Your place sounds great!  

@Karl McGarvey thank you! Were you able to find someone to appraise it? And also I think I would include all utilities in the cost of rent. Sell it as “all inclusive” so including electric cable water and internet. I could get a few hundred more/month this way, or if I did Airbnb it wouldn’t be an issue. Is that what you meant by being a hard sell?

@Stephanie P. Thank you! There are similar houses with connected mother-in-law suites and what not, but not exactly the same situation. Not sure it was meant to be a triplex but that’s how I intend to use it. It is zoned R2 so I don’t know if that helps or makes it more complicated. I am “young and single”, have a current single family home that will be a rental and then will live in this with the other two “units” rented or airbnb’ed. Maybe one of each. It’s a bit higher in price than I was looking for, but the numbers seem to make sense any way I run them compared to other potential rental properties in the area.

@Tammi Bieniek awesome plan! Sounds very similar to my situation. I’m not zoned commercial, but zoned R2 so I was told potential to build another dwelling in the property and it had plants of land to do so. Very unique opportunity I fell into. Not exactly what I was looking for and the top of my budget, but seems to make sense any way I cut it

Originally posted by @Willem Nichols :

@Stephanie P. Thank you! There are similar houses with connected mother-in-law suites and what not, but not exactly the same situation. Not sure it was meant to be a triplex but that’s how I intend to use it. It is zoned R2 so I don’t know if that helps or makes it more complicated. I am “young and single”, have a current single family home that will be a rental and then will live in this with the other two “units” rented or airbnb’ed. Maybe one of each. It’s a bit higher in price than I was looking for, but the numbers seem to make sense any way I run them compared to other potential rental properties in the area.

R2 zoning means different things in different municipalities.  You need to know specifically if multi family properties are allowed in R2 zoning and then figure out what you need to do to buy it as a single family and legally renovate it to be a 3 unit because right now, it sounds like a single family.  

Not sure which state you are in, but in California, if you are owner occupied in one, you can have a junior ADU in addition to the Additional unit even in the R-1 zone. You might want to check with your zoning or planning department for the design guideline for set back and all other stuff.