First deal in the works

9 Replies

Hey all. I think I finally might have my first deal. I have been looking in the Rochester NY market for about a year now and have finally figured out that the MLS is not working for me. I found an off market deal and I think it is going to cashflow. I ran my numbers pretty conservatively and still see a $350+ per month positive cashflow. It is a duplex in a Suburb of Rochester. I have two minor bumps in the road right now and I wanted to see if anyone else had some advice on these.

First, the lot is zoned as a single family, but the duplex seems to be pretty well separated and I feel it could get rezoned pretty easily. I checked on the town code and the type of zoning it has is capable of having the dwelling changed from a single family into a dual family through a building permit process. In the mean time this is making the bank financing tricky. They state they can only underwrite the loan by calculating rent from one side of the duplex, which throws the numbers out of whack obviously. Has anybody gone through this? Are there better ways to finance this?

Secondly, the property has a pool that would be shared by both tenants. I anticipate this property to be rented to a small family with kids, and maybe a young couple on the other side. I am a bit worried about liability with the pool  in the backyard. What are some of the risks, and mitigation I should be aware of with something like this?

All advice welcome!


Congrats on the deal.  You might run into issues with insurance with the pool.  If you get past that hurdle you might need a self locking gate and fence.  That is what they required from a previous rental that I had.  They strongly encouraged me to get an alarm for it as well.

Which suburb do you buy in ?

Good luck and again congrats.

I would proceed very cautiously when zoning is involved.  You mentioned you're in a suburb, but in the city proper once a multifamily has lost its rights (usually due to vacancy) it is nigh impossible to get them back.  I've recently combed through all the Zoning Board of Appeals documentation for the last couple of years (and I had done the same back in 2014) and in almost all cases the board denies requests to re-establish rights.  In my case I had a built-as triple zoned as a duplex, but the city wouldn't allow me to rezone it to a triplex.  In fact, I had to yank the 3rd floor kitchen, pull the 3rd gas meter, and "upgrade" the electrical to two separate service panels instead of 3.  It wasn't a bad outcome though, because I was able to add bedrooms and square footage to the 2nd floor apartment...and charge a commensurate rent.

I mention all that to suggest you should check with the town's zoning board and see if you can determine the likelihood of getting the property rezoned.  Have they granted the same relief to other similar properties recently?  What are reasons why they wouldn't?  Again, I would proceed cautiously because the last thing you want to be stuck with is an illegal duplex that loses money.

If you can solve that problem and go forward, I would remove the pool.  Pools require almost daily maintenance in the summer, and good luck getting tenants to agree on shared responsibility for it!  For a rental it doesn't add value, it adds liability...significant liability IMO.

Interesting feedback. Notes on the Pool are tough to hear. It seems like it is a liability rather than an asset. Is there anyway I might be able to use it as an asset? I'd hate to have to pay to have it removed, and make my offer less to compensate. This would reduce my competitiveness in the offer. I'm looking for any creative options. 

As for Zoning, I gave a call to my friendly town development team today and they were extremely nice and helpful. They shared with me that it should be a simple planning board permit application. I searched the last 12 months of minutes and actually didn't see anyone trying to do what I want to do, but that likely has to do with the general type of town this is, as not many duplex's exist in this town.

@Jeremy Marshall I am looking to invest in either Eastside suburbs, Webster, Irondequoit, Fairport, Perinton, Henrietta, Pittsford etc. I have also been heavily looking in some of the B neighborhoods in the city. Southwedge, Swillburg, Beechwood, 19th ward, and Monroe Ave.

@Mark W. Thats quite a story you have there. Tough to buy a 3x and have to turn it into a 2x, I would have been fairly upset. I guess I get it from the cities perspective, they don't want everyone splitting up every house out there. I work in Newark NY and they have the same view and don't approve any splits here. They have too many as it is.

Where is this?

Wondering what folks’ general thoughts are on East Rochester?

I would have the tenants pay to keep the pool or I would remove it. 

Is the property on town sewer and water? If not, you may need to increase the septic to handle two family, per your county health dept codes.

I ran into this with a SFR I was looking to convert into a duplex. The cost to upgrade the septic threw the numbers off.

Hello to all- hope everyone is doing well. I agree with many of the posts here- A rental with a pool- total liability. You would have to also consider water bill and pool maintenance costs into your numbers. Leaving it up to the tenants to split the costs could be an issue- one can argue they don't use it as much as the other, etc. etc. Insurance costs significantly increase if there is a pool- that is if you find an insurance willing to insure it.

As far as zoning- yes, please do your homework. My sister bought a triplex and had to convert it into a duplex because of zoning changes. She ended up spending triple the amount of money she had budgeted to convert it- so I would proceed with caution.

Make your offer contingent on the seller obtaining the correct zoning 

@JD DiGiacomandrea . I personally stay away from properties with pools, as you mentioned, the liabilities. Make sure your insurance will cover you in this aspect, some carriers do not (they'll cover everything else, just not the pool). Something you'll certainly want to verify. 

Thanks for all the feedback. In the end I lost the property due to the seller wanting too much for it. I really took the feedback to heart and couldn't risk getting into the property with this much risk. Onto the next offer!

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