Ankeny, IA · Member since 2014 · 29 posts · 79 votes
Hi Everyone!
I'm looking at living in half of a duplex and renting out the other. Ideally having the other tenant's rent pay for the mortgage payment. Anyways, in looking at the market I think the only probable option is to convert a single family into a duplex. However, in budgeting / financing this I'm trying to find the costs associated with such an endeavor. I've tried looking online but havent found anything really tangible that I can use to budget with. For example, a per sq. ft cost, or some type of list of needed "operations" with average costs associated with. Therefore, I'm reaching out to the BP community for help. Has anyone done this before and have some idea of costs with averages? I know it varies, but looking for averages and some type of clue.
Investor · Rochester, NY · Member since 2012 · 316 posts · 102 votes
11y
@Blake Anderson check out the many threads about using listsource. You can even do a map search to create a bounded area for the areas you would be interested in investing in, and then get a list of all the multi-families in that area. Then find a direct mail company like yellowletters.com and use one of their form postcards and mail it out to the owner's address (not property address). $400 should get you a number of solid leads in the area of interest that are off-market.
Investor · Rochester, NY · Member since 2012 · 316 posts · 102 votes
11y
@Blake Anderson before worrying about conversion costs, I would check with the building inspectors in your area to be sure you can actually do conversions. Many cities are trying to lower densities and won't let you do those types of conversions.
IMHO I would continue to look for duplexes - maybe even consider doing some direct mail right to the owners of those properties in your area to see if you can find a deal. I can't imagine the headaches trying to do a conversion with proper permitting, etc. vs just waiting until a good double shows up
Professional · Noblesville, IN · Member since 2014 · 222 posts · 66 votes
11y
It can be easier said than done....look at the utility/HVAC situation before going to far. Can be a bit difficult most times. May be viable on a MAJOR rehab where everything needs redone anyway.
@Blake Anderson before worrying about conversion costs, I would check with the building inspectors in your area to be sure you can actually do conversions. Many cities are trying to lower densities and won't let you do those types of conversions.
IMHO I would continue to look for duplexes - maybe even consider doing some direct mail right to the owners of those properties in your area to see if you can find a deal. I can't imagine the headaches trying to do a conversion with proper permitting, etc. vs just waiting until a good double shows up
Thanks for the response Dave. The only issue I am discovering with just looking for duplexes is that the majority of them are in "ehh" neighborhoods. Considering I want to live in one side, I don't want to live in less than ideal neighborhoods.
Could you further elaborate on the "direct mail" concept? How would I go about conveniently getting the direct addresses for the owners?
Ankeny, IA · Member since 2014 · 29 posts · 79 votes
11y
Originally posted by @Account Closed:
It can be easier said than done....look at the utility/HVAC situation before going to far. Can be a bit difficult most times. May be viable on a MAJOR rehab where everything needs redone anyway.
Thanks for the response George!
Just to clarify, are you saying that it may make sense if the single family needs a complete rehab? In other words, if the house is cheap enough and ****** enough, then it may make sense?
Professional · Noblesville, IN · Member since 2014 · 222 posts · 66 votes
11y
If your scope already includes major HVAC and plumbing, it may not be much more to split it out to a duplex. Make sure the numbers work. Splitting water can be expensive as well if the local utility requires a new pit.
I was looking at converting, but in my area buying a house and then switching it to a duplex would have to be rezoned. If all the houses around the one you bought are SFH they might not be agreeable to you putting in a duplex.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
1. Look for a duplex as mentioned.
2. Look for a larger single family in a R2 zoned area, if there are no duplexes, the floor plan may allow a simple divided living area, but probably hard to find. May consider a basement apartment. A 2 story might be possible, but you'll need it zoned properly.
A conversion is usually not a good investment property, very hard to redesign functional floor plans for 2 living units out of 1.
You'll may have utility and sewer issues, I wouldn't have tenants on shared utilities!
Building code may be an issue, if your area requires a fire wall between living units, that means a fire resistant wall (block) that raises above the top plate about 18 inches I believe under roof, that would be hard to put into an existing building from the foundation up.
By the time you do a conversion I'd say your tenant would be paying the cost of the add ons, you'll be paying for the house. You'd be ahead just buying a marketable home, live there, improve it over time, then move on to the next home, that's the normal progression of things. :)
Investor · Rochester, NY · Member since 2012 · 316 posts · 102 votes
11y
@Blake Anderson check out the many threads about using listsource. You can even do a map search to create a bounded area for the areas you would be interested in investing in, and then get a list of all the multi-families in that area. Then find a direct mail company like yellowletters.com and use one of their form postcards and mail it out to the owner's address (not property address). $400 should get you a number of solid leads in the area of interest that are off-market.
Wichita, KS · Member since 2015 · 14 posts · 7 votes
11y
Hi,
I am interested in a similar possibility. So, my wife and I closed on our first house just December 19, 2014. It was in the midst of this/soon after that I really got serious about self-educating in real estate investing. Now I wish we had found a duplex to live in and rent out the other side. In an attempt to try to make an investment out of this house, we are considering converting it to two properties (2 bed, 1 bath, full unfinished basement in the front; 1 bed, 1 bath townhome style in the back with the bed and bath being upstairs). Separating the two sections would not be difficult, since the back unit is mostly comprised of an addition that has its own heating unit (though I don't know about A/C) and we do not have any zoning issues in my area. That being said, I am concerned about the cost of making the back section into a viable rental unit. Here is what I would need to do:
1. Add a shower in the upstairs bathroom
2. Install a functional kitchenette in the addition
We are not sure about doing this right away, but I am just curious if anyone thinks it's feasable. Oh, and I estimate we could get $750/mo. easy for the front unit and $500-$550 for the back unit. Since our mortgage is currently sitting a little less than $750, that seems like it would be a good cashflow situation to me. We could also rent the garage for probably $50. I am curious to know what everybody thinks.
@Blake Anderson : Please let me know if you end up trying this out; I would love to hear how it goes!
Ankeny, IA · Member since 2014 · 29 posts · 79 votes
11y
Hi Everyone!
Just wanted to let everyone know that I followed through. I'm in the process of closing on a current 3 bed 2 bath split level house, 2,400 square feet with a 13,500 sq ft lot. I will be converting it to a 5 bed 2 bath with one unit being 3 bed 1 bath (ours) and 2 bed 1 bath (tenant). Will likely rent between 900-1100/month. Ill share before and after pictures when available.
Ankeny, IA · Member since 2014 · 29 posts · 79 votes
11y
Hi Everyone.
I'll have pictures in a week or so of the completed "product".
After many months and many obstacles the end is in sight. We should be "showable" by the end of this week for tenants. We bought at $112,500, invested just over $42,000 and it appraised for $175,000. It'll rent for $1,000/month we will be cash flow positive and living for "free".
Biggest lessons learned:
- I hate painting.
- Laying click in flooring isnt that bad.
- Always require the seller to pull a permit on your behalf when closing on the house to prevent the city code changing in the mean time leading to delays, headache, and more $. (Long story short, zoning dept. didnt inform me when I asked them about the zoning of this property that two months later they would change the city code that would essentially outlaw single family conversions to duplexes....it required me to present to zoning committees, city council, and months of waiting.)
- Do what you can, but always hire out what you can't or can't do well.
- Don't hire friends.
- Not being a "handy" guy by nature and more of being the "behind the desk" type, I learned a crap ton about electrical, plumbing, drywall, flooring, using power tools, etc.
- Invest the time to source your materials well, it may take more time, but itll save you alot of money. And when your budget needs to expand you've saved the money from material choices to do so.
As mentioned previously I'll share some before and after pictures in the weeks ahead.
Ankeny, IA · Member since 2014 · 29 posts · 79 votes
10y
It was rented within two weeks of first post for $1,100/month and a 2 year lease. We are mortgage free, property tax free, and insurance free, everything but our utilities free. When we move out, depending on the market, we will rent our half for 1200-1500/month.
All in all, if you're reading this and thinking about doing the same, go for it! You won't regret it.
Ankeny, IA · Member since 2014 · 29 posts · 79 votes
10y
@Justin WindhamNo Problem. Happy to help. The "top" unit is accessed from the main street with driveway/front door/garage access. The "bottom" unit is accessed via an alley and yes, a walkout basement.
Kennebunk, ME · Member since 2016 · 11 posts · 5 votes
10y
Glad this turned out for you. I'm thinking of doing the same as my area has few multi-family for sale. It's been a few months since this posted - still going well?
Investor · Milwaukee, WI · Member since 2016 · 2 posts · 1 vote
10y
I know this is probably a pretty crazy bump but I am considering converting a single family into a duplex as well. Its a 1930's Bungalow in the Milwaukee area.
I currently own a converted bungalow that was converted into a duplex and I see a similar layout in the place I am looking at. I will keep you guys posted about my progress.
I have yet to even make an offer on the place. I just checked zoning in order to ensure it can be used as a duplex (which is can). My next step is to get some estimates about converting the basement etc. Then we will move on with offers etc.
Glad this turned out for you. I'm thinking of doing the same as my area has few multi-family for sale. It's been a few months since this posted - still going well?
Going super well. Everything is great. Tenants are great. I'm looking to buy a 2nd home now in early 2017. Then likely going to look for hard money lenders / investors to do some flips in spring/summer 2017. I hope all is well on your end!
I know this is probably a pretty crazy bump but I am considering converting a single family into a duplex as well. Its a 1930's Bungalow in the Milwaukee area.
I currently own a converted bungalow that was converted into a duplex and I see a similar layout in the place I am looking at. I will keep you guys posted about my progress.
I have yet to even make an offer on the place. I just checked zoning in order to ensure it can be used as a duplex (which is can). My next step is to get some estimates about converting the basement etc. Then we will move on with offers etc.
Make sure to line up the lender and let them know your plans to convert as well. Make sure everyone is on the same page. In addition to zoning, find out if you need to separate all utilities. Some require separate meters for water and electricity, which can easily add $10k to your conversion costs.
@Blake Anderson - Thank you for posting. I am looking into this option as well. Early stages.
I have a few questions: - Are you doing all bills included? Or do you have separate utilities - How are you handling mail? Do you require the tenant to have a PO box? Or do you have a new address for your tenant? - If you are sharing Heat/Air with your tenant, how do you handle temperature adjustments?
Thank you for sharing your results and experience.
@Blake Anderson - Thank you for posting. I am looking into this option as well. Early stages.
I have a few questions: - Are you doing all bills included? Or do you have separate utilities - How are you handling mail? Do you require the tenant to have a PO box? Or do you have a new address for your tenant? - If you are sharing Heat/Air with your tenant, how do you handle temperature adjustments?
Thank you for sharing your results and experience.
- Are you doing all bills included? Or do you have separate utilities
------ My local zoning required separate utilities. In addition, my local market typically has tenants pay for utilities. For you and anyone else it would "depend". If you don't have to split utilities then lump the avg. utility cost into your rents.
- How are you handling mail? Do you require the tenant to have a PO box? Or do you have a new address for your tenant?
------- Each "unit"/side of the duplex has it's own address and own mailbox.
- If you are sharing Heat/Air with your tenant, how do you handle temperature adjustments?
------Split everything. This was a prereq for zoning. Couldnt have done a duplex without splitting it all. In fact, I think some split stuff was also a prereq from Wells Fargo. But I'm not 100% on that. Also, we did a "high end" rehab and no "high end renter" is going to want to have shared heat/cooling. They'll want their own controls and temps.
Real Estate Agent · Annapolis, MD · Member since 2017 · 109 posts · 82 votes
9y
Great job, @Blake Anderson, I am hoping to do the same thing on a SFH and your advice was most helpful! I will double check with zoning to avoid surprises - it'd better stay an R2 or else...!
I am curious to hear if you've shared more detailed costs of your rehab in another post?