Help with turning a Triplex into a duplex

4 Replies

Hello BP,

I currently have triplex under contract in Covington, Northern Kentucky. It a 3 story building (the top floor is the attic) where each floor is its own 1B1B unit. I am planning out my rehab but turning a triplex into a duplex is more complicated than I thought. Let me explain:

Background: At one point, this was clearly a single family home and was converted into a triplex and registered as one. It has been grandfathered in and currently is allowed to be an operating, non-conforming triplex. It is a full gut rehab. I plan to BRRR it. I estimate that I can rent the first 2 units at $650 each, and the 3rd at $500. Estimated Cash flow $650 after refinance. If I convert into a duplex, it would consist of one large 1B1B and one 3B2B with estimated cash flow of $550-650

Why I want to change into a duplex? maybe SFH? 1) triplexes are rarer in this area and are hard to find good comps. the comps are all over the place. Duplexes have more reliable comps and I can more predictably refinance. SFH probably have the best comps and arguably more equity but comes at a cost of lower cash flow and few doors. 2) the top floor is an "economy 1B1B" as was an attic and is less appealing. 3) the whole building does not have HVAC and to bring to modern standards, 3 HVACs sounds $$$. 4) Don't have to remodel a 3rd kitchen.

Problems of changing to a duplex? 1) since this was grandfathered in as a non conforming duplex, I will have to make a change of use. This puts me in a grey zone of code where I am "more conforming" and have to make several but not all adjustments to bring to code i.e. put egress from 2nd unit, put smoke detectors everywhere. The city is pretty vague and I run into the problem of having a lot more rehab after inspection 2) I will have to submit new permits for approval for the conversion 3) I lose one more door and possibly more cash flow, but the 3B2B will be more appealing to long-term tenants.

Has anyone ever done this and ran into any problems? Is this worth the hassle? Should my contractor be aware of all the codes necessary for the change? should I just keep it a triplex? or Just convert it to an SFH. I would love to hear your thoughts.

Thank you in advanced,

Unfortunately, I don't see this working based on my understanding of common municode.  Non-conforming use can't typically be expanded or substantially improved, soI doubt it can be "contracted," as you're describing.  

You would need to seek a variance from the zoning review board and you would be subject to their whim or available precedent, if any is available. 

Allowing non-conforming structures and usage is intended to allow continuance for actions taken prior to the regulation.  However, the intent behind these regulations is that the non-conforming usage will eventually be phased out over time as properties reach the end of their useful life / burn down, neighborhoods change with development, etc.

I'm not an authority on this, but I've done quite a bit of research over the years based on multiple properties I've purchased, been under contract on, and modified for "non-standard" investment purposes.  

So far from what I understand is that if I modify it to any other more conforming duplex or SFH, then I can never go back.

But what you are saying is that I either keep it a triplex or convert it to a fully conforming SFH. Correct?

Correct, but I would not advise the latter.  I love my non-conforming duplexes.  

Is there a way to combine the attic and the unit below in such a way where there's kind of a conjoined suite situation, so it's convenient to rent it out as one unit which includes a suite, but technically the attic could be considered a 3rd unit?  

hmmm the goal is to make the 2nd and 3rd unit into a single unit. The 3rd unit/floor consist of 2 rooms that are divided by the stairs that you come up to the floor on. One room is a kitchenette with bathroom, the other is a bedroom. 

My original plan is to remove the kitchenette and make it 2 bedrooms up stairs. combine the 2nd floor which has a living room area and a kitchen. 

I'm not sure exactly how I can consider the attic its own unit without leaving the kitchenette in then I lose a bedroom. 

Hopefully that makes sense. Have any ideas?

If you have the time and want to see, I'm more than happy to send you a video of the walk through.