House Hacking Converted Basement - LTR or STR?

Question

New member to the BP community looking to buy in the Norfolk VA area and looking for any insight from other investors in the area. Specifically, I'm hoping to turn the basement of a split level ranch into a studio or 1 bed 1 bath apartment that could ideally be rented on Furnished Finder or on AirBnB. The issue I'm running into is I can't seem to figure out if Norfolk VA allows renting out just a part of your home, while the owner occupies the rest. I know Norfolk allows "homestays" of less than 30 days, but what if the renter stays longer than 30 days? If anyone's implemented a househacking strategy like this, I'd love to hear your thoughts. Thanks!

Kit Serrell · Answer

If you can swing it, I would 110% try and go the Airbnb route. I make twice as much househacking that way than I would with furnished finder, mid-term rentals or long-term rentals. Two bedrooms in my 1,050 sq ft Raleigh home (I live in the 3rd bedroom) make me around 3500-4000/month and my mortgage (PITI) is just $2,049.

Bradley Dosch · Answer

Hey Christina, that's an awesome idea and something you should definitely do. In terms of finding local laws, I'd try finding someone in the city hall who can answer your questions.

Patti Robertson · Answer

PS - Most of Norfolk is below sea level. Have your insurance agent check to see how much in claims, if any, have been submitted for the address before your contingencies lift. Depending on the answer and the elevation, you may rethink a basement living area.

Patti Robertson · Answer

There are no restrictions in Norfolk for renting part of your home. It sounds like you want to convert it from a single family to a duplex though. If this is the case you want to check zoning to see if this allowed. The city would consider that a non-conforming structure if zoning does not allow duplexes. While Norfolk does have some structures that are legally operating in a non-conforming status, they are grandfathered because they were put into use before the zoning for the area changed. As soon as they come out of the nonconforming use for two years the structure has to be converted to meet current zoning requirements. They won’t allow you to convert a currently conforming property to use its nonconforming. Lenders are cracking down on nonconforming lots. I have an owner I manage for right now who was unable to sell his property in the same scenario that you described, except his second unit is a converted attic, I neither FHA or VA would approve lending on the structure.

All that said, what defines a separate living unit is a working stove. You could leave all utilities joined and create a “mother-in-law suite” that does not contain a stove and rent that as part of your home legally.

House Hacking Converted Basement - LTR or STR?

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