Bought a single family for $175K. It appraised at $530K as a multifamily. My numbers:

I don't see enough posts breaking down the actual numbers on single family to multifamily conversions, so here is one of my favorite buids.

In 2023 I found a single family in Philly that was recently rezoned as multifamily. Converted it into a spacious 2 bed, 2 bath unit plus a 4 bed, 2 bath unit.

• Purchase: $175K
• Estimated rehab: $110K
• Actual rehab: ~$116K
• Estimated ARV: $475K
• Actual appraisal: $530K (pleasant surprise)

Financing:

• Hard money loan at 12.38%, 8-month term
• About $56K cash out of pocket on the frontend
• Refinanced into a long-term loan after rehab

Where I was wrong:

Rehab took 10 months instead of 8. Between lumber waste, material overruns, and the extended timeline, my holding costs came in at $11K vs the $7,600 I projected — about 45% over. Two extra months of hard money interest adds up fast at 12%.

On the flip side, the ARV came in $55K higher than I estimated. So the refi was better than expected.

Where it landed:

Still holding. Rents are $4,500/mo combined. After mortgage, taxes, insurance, and setting aside for maintenance, I net about $1,500-$1,750/mo.

$56K in to cash flow 1,500-1750K monthly on a property appraised at $530K. I'll take that all day.

Biggest lessons:

• Rezoning is gold
• Budget your holding costs for 2 extra months minimum. you'll almost always go over on timeline
• The ARV surprise saved this deal from being just "good" to being great, but I didn't plan for that. I got lucky. Plan for the downside.

For anyone who's looked at SFH to multifamily conversions, what's been your experience? Curious how others are finding these deals and whether the numbers are working in your markets.