I'm looking for feedback on an idea I had about converting a multifamily property to studio apartments. The property consists of a finished basement, first floor, and second floor. The first and second floor has 2 beds, 1 bath. The property is located in Providence, RI. It's walking distance from a university, literally at the end of the street and driving distance, about 7 minutes into downtown.
My idea is to convert this home into multiple studio apartments, ideally for college students or young professionals. Likely would maximize current shared space such as living room and kitchen into an additional unit(s). So far from what I've seen, rents in Providence closer to the city are all $1000+. I came across the idea as I was researching the market and noticed a property that was a home converted into multiple 1 bedroom/studio apartments. The property that I came across was a makeshift loft studio apartment with rent over $1k, although it is in a great location.
I would be looking to do this legally and am currently looking for feedback and investigating the possibility of the conversion. My thought is that plumbing would be the most expensive as each unit would need its own bathroom. However, with the current setup, one bedroom on each floor is already located next to a bathroom. Utility submetering would likely be too expensive if even possible so I'd likely charge a flat rate for utilities.
Does anyone have experience in this sort of conversion? What are some pros and cons? Next steps to see if the possibility is feasible? Thanks.
@Anthony Markey - doing a full, legal conversion could take a lot of work and money. Have you thought about just doing room rentals for college students? You can get higher rents and not have the financial outlay of zoning issues, permitting and renovating.
I fully agree with the above person - if not done proper you have the potential for a can of worms you don’t want.
@Anthony Markey is there a reason you just don't try renting by the room instead of by the unit?
Seems like a way to make a little more money in a student scenario without having to do a lot of construction work or get the city involved.
Granted, there would be shared kitchen/bathroom, but on the effort/reward scale it would probably be where I'd settle.
Target students and rent by the room. This allows the greatest flexability with the least expense up front (zero).
Rent by the room is a good idea, but there's occupancy issues there sometimes. I'd encourage you to continue to check into your original idea. See if more could be charged for the studios, and if the numbers work. My best ideas are: 1) have a parking plan; 2) make a meeting w/the city zoning & planning dept- see if you are doing them a favor and if they can fast/cheap track you; 3) talk it over with a real estate attorney to make sure you're not missing anything before you pull the trigger. Good luck on searching out your idea!
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I can kind've see where you're trying to go with this, and how studio apartments can get you higher rents than rooms. However, this seems like a lot of work, and it may not even raise the value of your home too much. If you're trying to put a kitchen/livable area in the basement you may run into a problem. (Trust me I have two properties with finished basements) But some of my clients have issues when I called to get a smoke certificate when they want to sell and the Fire Marshall makes them tear everything in the basement apart. Not fun for you, as a seller, and it can break your deal with the buyer.
So I highly recommend keeping it simple. Rehab the property with nice countertops, cabinets, and flooring. Then rent out each room from 600-700. If you're looking for more income, buy another property.. and another one.. and then another one. Just don't go over complicating things.
I would have to agree with everyone else. Room rentals is 100% the way to go if you are shooting for the college rental market. If you are shooting for young professionals, they won't want to be in the same building as college students. If you go down the young professional road, then you could make the changes. If you are going the apartment route instead of the room approach, you are going to have some substantial utility costs as far as plumbing, heating, and electrical if you plan on separating the utilities. Just a thought. I don't believe you elaborated as to how many units you would be trying to create.
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