So I have an opportunity and am trying to decide what the best use for the space would be. Below are some of the numbers, I'd appreciate any advice on how to go about the conversion and also which scenario looks best.
Single Family Home. 206 Chestnut St.
-4 bed 2 bath
-Asking Price: $49,900
-Appraised Value $61,300
-Has a commercial garage that is being rented on the back of the house by a plumbing company. Company has occupied for 12 years. $500/month.
-New Fixtures (Fans, lights)
-New Roof (2 years old)
-Water heater replaced 3 years ago
-Updated electric. Baseboard Electric Heat.
My question is what would be teh best use for the space. It can be converted to a Duplex if I desired to. I have a Duplex that is down the street collecting
-Unit #1: $510
-Unit #2: $510
I think safe numbers for this home would be: Could be higher
-Unit #1: $450
-Unit #2: $450
The Single Family Home could rent for :
My biggest concern is the Sale after I hold for 5 years. The Duplex Comps would probably only go for $60,000 based on the current market but there are 3 houses on the same block that have sold for $90,000 in the past year.
So Final Numbers:
Single Family: $650 + $500= $1,150
Duplex: $450 + $450 + $500= $1,400.
Which would you do?
Have you researched the process to convert a single family home to a duplex in your municipality? I would start at the building department and then contact a zoning attorney for more info.
In my market in Boston, converting a single family to a 2 family requires a 6-9 month zoning process, community meetings, many thousands of dollars in attorneys and architect/engineering fees all with no guarantee that it will actually happen. There are many regulations that you may need to comply with, lot size, parking requirements, egress etc.
I just recently went thru this process to convert a 2 family into a 3 family. It took 7 months and cost about $15-16k.
Also in regards to the resale value, I would go with whatever potential buyers in that neighborhood would value more. If the answer is duplex and its soley a rental property, then future investor buyers are just going to cap it out to determine the value. Aside from that, a retail buyer could do a house hack with a duplex and that could increase the value.
Hi @Garrett Hogan , this is extremely helpful. Thank you.
One more question, would I be able to rent it out as a single family residence while going through the zoning process?
I think that it depends on your long term goals. If this is a long term buy and hold then you may want to calculate the cost of the conversion divided by the difference in rent. If you plan on selling after renovation consider the difference in price between selling it as a single family versus a duplex.
I’m my Market (Milwaukee) duplex properties that look like single family homes are highly desirable.
The profit margin is much higher on renting out both units in a duplex and as mentioned before they are very desirable to house hackers and investors when they are on the resale market.
@Cassidy Burns yes you can def rent as a single fam during the process. That’s what I did with mine!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing