Convert a duplex into 4plex in R5 zone

Portland, Oregon
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Convert a duplex into 4plex in R5 zone

Mike Meerschaert
Portland, OR · Member since 2019 · 14 posts · 8 votes

Hi,

I own a Duplex in North portland, and each side has a finished upstairs with 1026 sq feet, a 726 sq foot unfinished basement, and a 300 sq foot garage. I'm considering finishing the basements on both sides, and turning them into 1br units, so building out a bathroom / bedroom / kitchen downstairs on each side.

Does anyone know if it's legal to convert a duplex into a 4-plex in an R5 zone? House Bill 2001 makes me think it might be possible, but I don't know for sure. I reached out to Portland BDS but haven't heard anything back yet (been about a week) so i was hoping someone on these forums might know.

As for the numbers, I've spoken with a local property manager and they think it'd add between $31k - $38k in annual rent, and I've spoken to a contractor they estimate it'd cost around $180k, so that'd be between 17% - 21% ROI, so it's kind of a no brainer if it's legal and I can secure funding.

As for financing the construction, I have excellent credit, and some equity built up, so I'm considering using a HELOC with a 95% LTV, Does that sound like a good idea? Anything I should be aware of? Or should I consider something else? It's my first investment property so I'm kind of figuring this all out for the first time.

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Brad HammondBusiness Member
Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
6y

Sounds like a slam dunk @Mike Meerschaert.  I converted a 4-unit into a 5-unit in N. Portland a couple of years ago.  Hit me up if you want to get into the nitty-gritty of it.  If I recall, it is not just the zoning they look at but how many people will be living on the entire lot.  I had to go into the permitting office to find that out.  Applying for the permit of occupancy triggers A TON of other things that need to be done and the permit cost me about $13,500 for a studio.  

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  • Brad HammondBusiness Member
    Real Estate Agent · Portland, OR · Member since 2016 · 1k+ posts · 605 votes
    6y

    Sounds like a slam dunk @Mike Meerschaert.  I converted a 4-unit into a 5-unit in N. Portland a couple of years ago.  Hit me up if you want to get into the nitty-gritty of it.  If I recall, it is not just the zoning they look at but how many people will be living on the entire lot.  I had to go into the permitting office to find that out.  Applying for the permit of occupancy triggers A TON of other things that need to be done and the permit cost me about $13,500 for a studio.  

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  • Bruce Bingham
    Investor · Portland, OR · Member since 2015 · 7 posts · 2 votes
    6y

    @Mike Meerschaert

    Check out the details of the residential infill project. I believe it is close to passing but has not passed yet.

    https://www.portland.gov/bps/rip/residential-infill-project-documents

    Let us know how this project turns out for you!

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  • Mike Meerschaert
    OP
    Portland, OR · Member since 2019 · 14 posts · 8 votes
    6y

    That's perfect thanks @Bruce Bingham! It looks like fourplexes will be allowed in R5 zones once this passes.

    My building is 4104 sq feet and the lot is 5,000 sq ft so looks like It'll work. Thanks again!

    1Reply
  • Sharon Beatty
    Member since 2020 · 64 posts · 17 votes
    6y


    @Mike Meerschaert

    I don't have great advice but would love to follow this as you go through the process. We have a house in N Portland. We converted the basement to a 2 bd/2bth apt with separate utilities. Considering converting the 2nd floor to a short term rental and we'll live on the first floor.

    Out of curiosity, where in North Portland is your duplex? Since I live here, I might know it!

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  • Sharon Beatty
    Member since 2020 · 64 posts · 17 votes
    6y

    @Bruce Bingham,

    Do you know when the infill project will be voted on? The last I checked on it, it was supposed to be last fall, which obviously hasn't happened. Technically, our 2 bd/2bth is a one bedroom with the 2nd being an "uninhabitable storage space" for the renters. They were willing to do this because it was expected the infill project would be approved shortly and it allows for basement apartments to use the entire footprint even if that's over 800 sq ft, as long as the building is more than 5 years old. 

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  • Mike Meerschaert
    OP
    Portland, OR · Member since 2019 · 14 posts · 8 votes
    6y

    @Sharon Beatty sure I'll update this thread with my progress! I have a long term tenant who is on a 2 year lease on one side of the duplex, so I'm going to add a unit on my side for now, and do the other side when she moves out in about 18 months.

    As for the infill project vote, from that website it looks like they are voting on it this wednesday at 2pm. I believe you can watch the vote on their youtube channel here: https://www.youtube.com/channel/UCcPIUh7CWwtBXisMPHWG65g

    1Reply
  • Mike Meerschaert
    OP
    Portland, OR · Member since 2019 · 14 posts · 8 votes
    6y

    FYI the vote is live now: https://www.youtube.com/watch?v=6hqtvAEnMis

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  • Mike Meerschaert
    OP
    Portland, OR · Member since 2019 · 14 posts · 8 votes
    6y

    So I was wrong they weren't doing a final vote that day, but I did get in touch with Morgan Tracy who is heading up the infill project and he told me that the new law will come into effect in August of 2021. It'll be a year because it'll likely get appealed so the plans might change slightly, but due to the state mandate in House Bill 2001 it will definately be happening one way or another.

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  • Sharon Beatty
    Member since 2020 · 64 posts · 17 votes
    6y

    @Mike Meerschaert,

    I understand that it just got passed today! I'll have to check on when it goes into effect. 

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