Converting a Duplex back into a Single Family

4 Replies

I've gotten good advice on this forum regarding one of by problem properties. It's a duplex in a roughish neighborhood. The advice I was given was to sell it. I took that advice and listed the property in February. I continue to drop the list price by 5,000 every few months or so. It's now at 25,000. The upper unit is rented at 350, and the bottom is vacant (last rented at 500). So far there's been 0 interest. I think the low end of the local market is flooded because a local investor is dumping 20+ properties.

The rest of my rentals are doing well, they are only a few blocks away and are all single families. So here's my thought. Once upon a time this use to be a single family. I could just convert it back. There aren't many properties that are 4 bedrooms in the area. I wouldn't have to worry about the lawn or garbage anymore. I wouldn't have to worry about tenant A annoying tenant B or who brought bedbugs into the house. 

Pros: Less turnover, less tenant vs tenant drama, 4 br/2ba is a nicer setup, no lawn or garbage, Section 8 would be easier to work with  

Cons: Rent at 725 vs 850, need to address how the house is metered, conversion costs, might be easier to sell as a duplex to an investor

Am I missing anything? I know most folks are heading the other way converting a single to a duplex. Is anyone else going the other way?

Where is this property?   Certainly not Portland Oregon.

I have had similar experiences with duplexes (called two flats in my town).   I became a single family investor.  I got higher performance out of the properties.  The expenses are greater than apartment units, but a duplex has the same issues as a single family house.  

Here is your problem:  the costs of the conversion back to a single family house.  Probably not worth it for this lower income area.  You said your property is at 25K.  Not a good bet to dump too much money into these properties.

PS: I've done well with some lower income properties that I purchased during the real estate crash. Some in the B.P. community have been critical of these type of properties.

How are you coming up with your rent amounts? I'm in VA and don't have a clue about your market, but I checked out the HUD Fair Market Allowances for your county and the allowances for your market are about $100 more than a 1-2 bedroom, and about $300 more than a 3-4 bedroom in my market. I'm getting as much as $1700/month for a 4 bedroom single family. $850 is a ridiculously low amount. That's a reasonible two bedroom rent amount.

@Patti Robertson  

- Got my rent number from my sister who had a 4br section 8 rental nearby

@Brian Ploszay

- Many of my rentals were acquired during the crash too. I know folks are critical of properties in the rust-belt that have a little chance of appreciation. But for me they've done well. Although they are a pain to sell.

I understand that by dumping money into this conversion I will not be getting it back by increasing the value of the property. I will be only getting it back by decreasing the turnover and improving the quality of tenant. 

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