Should I convert a SFH to duplex?

Question

Vaughn Smith · Answer

@Brian Orr you might want to check with the town and city to see if its a possibility to do the conversion, then take a look at if the conversion will have any effect on your bottom line.

Teri Feeney Styers · Answer

@Brian Orr I have done two sfh to duplex conversions. The question becomes "highest and best use". Does a duplex make more sense in that area on that lot? Is this a neighborhood of SFH and it would be the only multi-family? Or is it a mixed use or multi-family area anyway? In my case it significantly added to the ARV of each property.

Corby Goade · Answer

Typically, I like to use a five year return as my barometer for whether I flip or keep a property, which might help you decide what to do here. Will you make up your rehab costs in less than five years through cash flow as a rental? If yes, you keep it as a rental, if no, you flip. You could apply this to both scenarios that you've presented above to help you decide which is the best route to take on this property.

I use that same formula for every improvement- rehab a kitchen or bathroom? Will I be able to raise the rent immediately enough to recoup the cost in less than five years? If yes, then I do it.

Brian Orr · Answer

@John Webster thank you for the replies. unfortunately I wrote this from my phone and the text didn't translate well. It should've looked like

Conservative numbers:

Purchase: 50k

SF flip: 80k

ARV: 165k

Duplex flip: 100k

ARV: not sure

Rental: $600/unit

@Patrick Jung that's an amazing project! Unfortunately this one is nothing like that one.

Patrick Jung · Answer

In my area, I have seen successful flips from 2FAMs converted to a huge SFH.  Since the typical single family house in the area doesn't have the square footage, they made a killing. It was a foreclosed up & down with about 1200sq ft per unit and when converted about 2500 sq ft.

They bought for 40k and sold it after complete rehab for like $355k.

Patrick Jung · Answer

In my area, I have seen successful flips from 2FAMs converted to a huge SFH.  Since the typical single family house in the area doesn't have the square footage, they made a killing. It was a foreclosed up & down with about 1200sq ft per unit and when converted about 2500 sq ft.

They bought for 40k and sold it after complete rehab for like $355k.

Patrick Jung · Answer

In my area, I have seen successful flips from 2FAMs converted to a huge SFH.  Since the typical single family house in the area doesn't have the square footage, they made a killing. It was a foreclosed up & down with about 1200sq ft per unit and when converted about 2500 sq ft.

They bought for 40k and sold it after complete rehab for like $355k.