I'm going to be closing on my first property soon which is a duplex in South Mpls. One of the selling points for me was that it has major value add opportunities, the primary one being a 3rd floor with separate entry and has potential to be renovated into a separate unit. 

I'm trying to figure out the best way to go about this, and from reading past posts on this topic it looked like converting from a duplex to a triplex was a PITA since you are going from residential to commercial building code. I'm wondering if anyone has insights on how the Mpls 2040 plan will affect this process. The past zoning for the property was OR2 (high density office residential district) while the new zoning is Interior 3, for what it's worth. Since I am owner-occupying I could shoot for making it an ADU and living in the upper unit, but if I could do the triplex conversion without additional headache I think it'd be worth it.

Another complicating factor is that this is an old property and the electrical is not up to code. Separate fuse boxes for all 3 units with a subpanel on the top floor that I'd be renovating but there is also some active knob and tube wiring visible in the basement. I was aware that the electrical was not up to code and would have to be redone at some point if I wanted to update the bottom units and eventually when I sell the property. And for a full remodel of the top unit the GC would need to pull permits and redo the electrical for the 3rd unit, so I would put in a breaker panel and add GFCI outlets for that unit. What I'm wondering is if they pull permits on the top unit does that mean I'll have to update the electrical for the other 2 units as well? I am hoping to wait on updating electrical in the other units until I am done with the 3rd unit renovations since that is the largest value add out there, and also that **** is expensive and I don't think I could afford a full electrical rewiring along with the other planned renovations. And there are current tenants living in the bottom unit, so I have to be respectful of them of course. Fortunately, since this was an off market deal it was priced to where it can still cash flow in its current state as a duplex, but its potential would be much higher with a 3rd unit, updated bathrooms/kitchens in the bottom units, etc. 

Also I wanted to see what your guys thoughts are on using a GC for most or all of the renovations vs. acting as your own GC and hiring out to subcontractors. I understand that hiring a GC is probably going to mean higher overall project costs but if they are properly vetted and good at what they do will save lots of headaches and would finish the project much quicker. Right now I'm thinking the most cost effective strategy may be to have a GC submit the plan to get approved by the city, then hire out my own electrical, plumbing, HVAC, and take on the flooring, wall prep and painting myself. I'm not experienced in this so I'm a bit out over my skis but excited to get into it regardless.

Lastly, if you guys have any recommendations for the variety of work I'll need done it would be much appreciated. I've already got a decent list put together from my agent, mortgage lender, and other helpful people on BP and the facebook RE groups but I could always use some more. The main one I'd be looking for is a licensed electrical contractor who can upgrade service and rewire a house for a competitive price. Currently have Jeff from Skyline Electric, Rich at Watts Electric, Troy at Signature Electric, and Lanz Electrical as potential bids but haven't reached out to them yet, so if anyone of you can put in a review on their quality, timeliness and price that would be awesome. 

Sorry for the long post and thank you for your time reading it!

Those are all good electricians. I wouldn't be surprised if the bid was over $15,000. Skyline completely rewired a 3000 sq ft house for me for right at that and they were the cheapest

@Jordan Moorhead Thanks man. Yeah I kinda figured that would be the case. I'll start reaching out to electricians so I can get an idea of what it'll cost for my place. Since it is multiple panels that need to be upgraded I'm guessing you are right and that 15k is low. Hopefully I will be able to delay that until after the top unit is done and I can start saving up more.

Call the city to say what they say about the zoning. Im sure the whole city will be getting revamped zoning, so just calling and hearing their thoughts will give you clear moves ahead.

@Adam Widder Thanks Adam! I will talk to a city planning official this week

Evan, how is this going? Did you ever have a call with the city official? I am really interested in doing the same thing in Minneapolis. I keep reading people saying the rezoning is such a hassle but that doesn't mean it can't be done!

@Cyrus Hanson Yeah I talked with both zoning and building code officials in Minneapolis. From what I've heard it sounds like zoning shouldn't be a big deal with the 2040 plan going through. For duplex to triplex they do want an off street parking spot for each unit, though this clause can be waived if you're within a certain distance of major public transit or bus line, which I'm pretty sure I would be. I don't remember the exact criteria so you'd have to call to verify, but yeah aside from that I think most areas will be qualified for triplexes starting in 2020.

Building code gets a little trickier at least for going from 2 to 3 units, because of the change from residential to commercial building code, which would include soundproofing between units, fire doors, etc. I just met with a couple contractors who are going to provide me bids on what they think a renovation would cost as an ADU vs going to a triplex and requiring those extra modifications to make them code compliant, so I could let you know what the difference is when I get those bids back.

That sounds great Evan. Yes, I've heard a bit about the commercial building code requirements once you get to 3-4 units instead of just 2. Keep us updated on your progress with this effort, very interested to keep hearing about it. 

@Evan Kraljic do you have an update on the costs?

@Raymond Rashid I've decided that while I'm still going to renovate the attic area, I will be including it as part of the second unit. I could go very in depth on this but everyone's situation is going to be different and even for one situation you will get different answers depending on who you talk to. I can tell you a few things though.

Sprinklers would have been by far the most expensive cost for me. Retrofitting sprinklers to existing construction is not economically feasible at all. I didn't get a formal bid but one estimate was around 50k for a reference. That alone is more than it would cost to get all the electrical/plumbing/HVAC and cosmetics in rentable condition so I did not pursue further.

You will need two means of egress, sprinklers or potentially both depending on location of the unit (3rd story or basement) and other factors. Second entrance will be very situation dependent but I'd guess around 10-30k for a shoot from the hip answer. Other required upgrades would include replacing ceilings with 5/8" drywall and adding insulation, sound channeling to get to commercial code soundproofing requirements (5-10k?), fire rated doors (500/door?), and sewer/water access charge for qualifying a new unit which is $2500. It all adds up fast and you're at the mercy of the city which I did not desire considering I went into real estate to feel in more control of my investments (among other reasons).

Bottom line: Don't rely on adding a unit to make an investment work because chances are it will cost much more money than you had originally planned. I can finish that space and effectively add 2 bedrooms and a bath that could rent for 550/room which is probably 80% of what I'd get for renting as a separate unit. But the full triplex conversion might cost me 3x as much.