Turn Duplex into Fourplex-BRRRR

[Karissa Sampson]

I would appreciate experienced investors' input for my BRRRR plan. My primary question is, does anyone have experience converting a duplex into a fourplex? The additional 2 units will be basement level units. The property is zoned appropriately to allow this (allows SFH, 2/3/4/10/50/100 unit complexes, co-ops, literally everything) and would require only a site plan change application (to change from current county duplex/triplex status to fourplex status) and normal renovation building permits. I spoke with the assistant director of both the building coding/permit office and planning department about it and they didn't see any issues. Based on code requirements, setbacks etc., the property seems to be a great candidate for this. The duplex sits on a 1/4 acre and is centrally positioned on the plot of land. Its a brick ranch and has an unfinished basement that is the same square footage as the main floor (2,100 upstairs and 2,100 downstairs; so 1,050sqft per unit), basement is subterranean and ceiling height is only a few inches above ground level. I have experience renting multiple units in this town and am sure on how much rent I can get. Current value of 2:1/2:1 duplex is $550k.

If we just add 2 bedrooms and 1 bathroom by finishing the basement, the total rental income of $5000/month. ARV estimated to be between $625-650k.

If we make it a fourplex, accounting for lower rent for lower level units, the total renal income is $6400/month. ARV estimated to be between $725-875k.

So I'm wondering if the conversion from duplex to fourplex is worth the extra renovation costs. We are going to have a general contractor friend come out and bid it both ways for us.

Has anyone else done this before? Was it worth it? What should I anticipate that I'm not anticipating?

thanks in advance!