Rehab - Single Family to Duplex

19 Replies

Anyone have any experience turning a larger SFR into a Duplex? Basically what would you look for in a SFR to give you this option besides size of course. What to look for to minimize rehab costs? Also, if anyone has any blog posts on this topic, I would love to read them.

@Justin C Huggins The first thing I would want to know is whether that is allowed in whatever area you're looking. Up in the North East zoning laws are tight so in most cases you're not simply allowed to add a unit. Carefully research whatever zoning laws or building permit regulations you may have to abide by.

If you understand that already then, I would next look for layout. If you're putting the unit on the second floor of a 2 story, can you put the new kitchen above the old kitchen new bath above old bath to make it easier to run plumbing & electric? Same thing if you were building side by side, can you make it a mirror image, etc. Its likely that if you do it, you'll have to redo most if not all of the wiring and electric to add separate meters etc. Don't under estimate the cost of this part. The other thing to look for is how easy it would be to add a second entrance and most likely a 2nd egress per unit. 

@Max Taylor 's comments were great!! @Justin C Huggins I would add that if you don't plan on adding square footage either by adding space above or next to it, I would look for a property with extra bathrooms. Most people think it's easy to just add a bathroom somewhere without considering the work to move plumbing and draining. It's a whole heck of a lot easier to convert a bathroom into a kitchen rather than adding a bathroom in some random corner because it'll make the property function better. 

Final note is be aware of meters and the cost to add one if you would like to add a unit. The alternative is to be aware of the fact that you, or a buyer, will not be able to charge a tenant for utilities. 

@Max Taylor

I have researched the area and the downtown area will not allow multi-family.  I have looked at some of the outlying areas and most are zoned to allow multi-family as long as they are not in subdivisions.  Thanks for the info, on plumbing would it be required to have a separate water line ran to second unit or could you split at the house?  When estimating, would you add any additional safety factor on top of the original rehab budget just to account for any unforeseen?  If so, what % would you use?  I appreciate all the information, very good points to look for in a property.

The first thing I'd recommend you check is the zoning. That is going to be the biggest hurdle to do something like that. Very few properties will be zoned to where you can convert them from a SFH to a duplex.

@Kristina Heimstaedt

That is a very good point, I never thought about the ability to put second kitchen where a second bathroom might already be.  Definitely would decrease extra plumbing required.  When running the numbers, I would add a 10% safety factor for unforeseen issues.  Should I increase that for a project like this?  Of course, I know that is a tough question based on so many variables.

@Mike H.   This is actually something I have already looked at quite a bit.  Most of the older homes in the outlying areas are zoned for multi-family.  The unfortunate part is some are on septic and I would have that addition cost to account for on those, as both units have to have there own.  These houses are usually a little cheaper though and are still close enough to rent pretty well.

@Justin C Huggins As other have stated, Zoning, Zoning, Zoning.  If you find something that is properly zoned, next hurtle would be price.  Single family houses almost always sell for more $/ft2.  If your looking at gut rehabs, then it may work.

As for your utilities question, if you want your tenants to pay for them, they would have to be split before the house (for water) and at the house (for electricity and gas) with separate meters for each unit.  To split any existing utilities would most likely require the entire house to be redone. If you are not able to afford to split the utilities, you could include them in the rent price, but you would end up paying for them as the owner.

Yikes. Yea, to add a separate septic. Plus to have to set up each one with their own kitchens and bathrooms, entrances, etc.  I think you'll be hard pressed to make that work. The other thing is that your exit strategy will now be fairly limited to other investors which will probably reduce what you can get for them as well.

I would much rather have a 2,000 sq ft SFH and rent it for 1300 then to have 2, 1,000 sq ft units in a quasi duplex and get 800/mo rent each.

@Justin C Huggins I would also make sure that your target area of renters/buyers are accepting of sharing a wall/outdoor space with a neighbor. If that limits your marketability of the property, the additional money isn't worth it. To answer this question and your concerns about costs, I would talk to a local real estate agent or another local investor and a general contractor. Hopefully between the two, you have a better idea of what you're getting yourself into and some guidance.

@Mike H. Yeah, you are probably right. It would have to be a killer deal to make sense of it, even then like you said, might be better off to just rent as SFR. Some of the properties I found were on city sewer too, but those seemed to be a little more cost. Might be one of those things that initially looked good on paper, but once you factor in all the little extras and risk might not be worth it.

@Mike Wood I am light to medium rahabber, for now anyways, so might not be a huge benefit for me.  After reading some of the comments it seems more and more that might not be a greatest route.

Originally posted by @Justin C Huggins :

@Max Taylor

I have researched the area and the downtown area will not allow multi-family.  I have looked at some of the outlying areas and most are zoned to allow multi-family as long as they are not in subdivisions.  Thanks for the info, on plumbing would it be required to have a separate water line ran to second unit or could you split at the house?  When estimating, would you add any additional safety factor on top of the original rehab budget just to account for any unforeseen?  If so, what % would you use?  I appreciate all the information, very good points to look for in a property.

I'm not sure if you would be required to separate out the water, that would depend on the local building codes, but I would do it. Separately metered utilities allow you to have the tenants pay for their own usage. 

In terms of additional safety, you would want to check into the fire code to see if you would be required to add a sprinkler system and how many egresses each unit must have. In terms of budgeting its hard to put an exact % overage number on it, but I can tell you, 10% would be way too low. To be conservative I would figure out what new construction costs in your area and use that has a baseline including the cost of adding septic which isn't trivial. 

We add units to properties up in Boston to create condos and most of the time its more challenging than simply knocking whatever's there down and building new construction. I'm sure there's ways you can do it on the cheap and cut corners but I wouldn't assume that its going to be quick easy or cheap to do. 

If I were you, I would focus my energy on raw land or tear-downs and try to get approvals for as many units as possible and then build from the ground up or do modular. Then you can lease it, refi and hold, or lease it up and sell. 

@Max Taylor Generally 1-2 family houses do not require sprinkler systems, that is the case on the national code, but some cities my require it (west coast mainly from what I know).  There would be some fire separation, but a duplex its pretty easy (nothing more than a 1 hr fire rating based on national code).

@Max Taylor

I was actually looking at this route as I thought it might be easier than building from the ground up.  It turns out I was probably wrong.  I might be better off to reconsider building or just stick to looking for duplexes that need rehabbed vs a conversion project.   Thanks

Originally posted by @Justin C Huggins :

@Max Taylor

I was actually looking at this route as I thought it might be easier than building from the ground up.  It turns out I was probably wrong.  I might be better off to reconsider building or just stick to looking for duplexes that need rehabbed vs a conversion project.   Thanks

 Yeah, makes sense. I wouldn't totally rule it out, if there's the right deal out there it might work just can't pay too much for it. 

Have you looked into modular, or pre-fab in your area? I have a friend who has had a ton of success taking vacant land, organizing the site work and then buying prefabbed duplexes and sticking them on slabs. Just requires good site work contractors, electricians and plumbers to essentially hook everything up. Might be a good route if your concerned about jumping into stick built new construction. 

@Mike Wood Thanks, it is good to get info on something like this.   I am looking to buy so I can at least do part of the rehab myself to cut some labor costs.  Mostly what I am looking for is very out of date homes, with few repairs.  

@Justin C Huggins   Check with the city you can do it based off of zoning, if it is not separate metered how much will that cost, how much more in rents will you get for the property as a duplex vs a single family and how much will it increase it's value.  Size is really not a consideration for us as we run comps on the square footage as a single family vs two separate units, and whichever is greater return on investment is the route we go.

@Casity Kao

In my area, which is a smaller town, rent tops out at around $900-$1000. I am afraid it would be very hard to rent out higher than that. Duplexes (2 bed,1 bath) are being rented around $700. I could travel 1.5 hrs away and could rent much higher, but due to me working a full time job and taking on some of the rehab I would prefer to stay closer to home if the numbers make sense. Still might be better to keep it simple with SFR or older duplexes as I have heard from many others in the above posts.