All Forum Posts by: Prashanth Mahakali

@Alex Martinez

I was referring to zoning districts. Mostly RS-3 which is the most common residential zoning district. Please note that zoning certificate of number is dwelling units is typically a real estate closing document. If I get a zoning cert for 3 units and after closing go to apply for a building permit, zoning department which originally issued the certificate will not accept its own certificate. I would have to go through the whole discovery process and prove the legality of the unit in question. The most definitive proof of a legal dwelling unit is a previous permit or historic water records. You can get a copy of these by filing a FOIA request.

You purchase a zoning certified 2 story 2 unit building with a basement. Basement appears to have a unit and there is no permit on record for the same.

It is not illegal yet. Based on the zoning, only a single family can be established on that lot. Now you have a legal unit, a non-conforming unit and an “may become illegal” unit. You rent all 3 units and continue to collect rental income.

You place a tenant in the basement and have a disagreement and on their way out they call the city and you now have an “illegal unit” violation. Now you have one non-conforming unit that has been grandfathered and one illegal unit.

You apply for a permit to remove the illegally erected walls and fixtures. Once restored to an open basement, violation is removed and case is dismissed. Illegal unit is now gone.

You are now at a 2 story 2 unit building with an open basement. You have two choices:

First: Apply for a building permit to duplex the first Floor unit unit into the basement and put it to use right away. Permit process should be relatively easy.

Second: go through a zoning process and legally convert the basement into a legal unit. This not only makes the basement unit legal it also makes the existing non-conforming unit into a conforming unit. So you have all legal conforming units. Without any community opposition this could cost up to $7k-$10k for legal and filing fees and take up to 3-4

Months. Not a big deal for the savvy investor.

Non-conforming: does not meet current zoning or building codes. Usually established before current codes came into being. Think OLD. Generally accepted to continue to exist as long as there is no expansion or change of use. Either one would lose the “grandfathered” status. Ok investment strategy

Illegal: created specifically without permits or permission clearly and willfully ignoring the codes in place and work performed while codes are in place. Can exist until someone files a complaint or court forces you to remove the unit. Risky investment strategy particularly for the investor without a team.

So while you can go ahead and acquire a building with a non-conforming unit or an illegal unit, continue to earn rental income, understand and prepare for the worst case scenario. With the right team, you make a seemingly unattractive building into a cash cow. Rinse and repeat.

Hope this helps.

Prashanth

I think the information about the ADU process is already available. Now that everyone is excited about ADU's, lets talk details. The below is specifically geared toward backyard ADUs. If you are in the pilot area and become eligible to build an ADU over the garage and be the first of two in your block, read on:

1. Foundation: You are in the pilot area and decide to do this. At a minimum, the "dwelling unit" that you want to situate over the "garage" would now put more loads on the foundation which, in most cases is a thickened slab. 

2. Water service. As of now, the water service comes to the front of the building and goes into the meter. For the water supply to reach the rear ADU, you would have to either come through the house or outside of it with its own meter.

3. Separate electrical service and panel? Typically there is one service feeder to the building. In the case for a backyard ADU, would there be another service drop?

4. HVAC: Need to insulate and drywall the garage ceiling now potentially with more sheets of drywall at the ceiling since now someone is going to reside over a fuel-burning device: Car. Also, the shell needs to be completely tight in order to prevent any gases from sucked into the unit above. 

5. Noise: every time that garage door opens, someone is going to wake up angry! so lots of insulation.

Now, let's talk about the basement ADUs which are more feasible but with fewer issues. Most of the issues related to backyard ADUs above such as foundation, HVAC, Noise, and utility separations etc. are easier to tackle in a basement ADU. Although some issues to think about are:

1. Water service: Most of the homes that want the basement ADU should come with a water service upgrade waiver. The city of Chicago used to have a form to apply for the waiver. If building department forces you to upgrade the existing water service, that could be an expensive non-starter.

2. Ceiling height: You may be eligible to create your ADU with less ceiling height but it wont be a desirable or healthy space. However, if you dont meet the ceiling height requirement, you would have to lower the slab. This is a major structural undertaking depending on how far your current foundation extends below the basement slab. Avoid underpinning at all costs.

3. Water control: At a bare minimum, before you make a current vacant basement into a dwelling unit, make sure to have a drain tile connected to the sump pump and an overhead sewer system. WIthout these, most of the ADUs are going to get a bad rap a few years from now. 

In summary, while I am happy that the city has taken up this initiative, it's severely lacking in many fronts and my fear is that it will not achieve the goal: Creating more affordable housing stock. Rather, it will create issues for people who cant afford to add these ADUs but are going to go for it anyway, or the building department is going to make it difficult by enforcing building code requirements. Next time you get to talk to a building inspector, ask them what they think about this. You will get the real run down! Sorry for sounding cynical but this is a step in the right direction but we have ways to go! 

@John Warren look forward to being there and sharing information with the attendees!

Thank you @Mark Ainley, @Jonathan Klemm for your kind words! I try to be the best architect for my clients and that is definitely a higher bar for me! @John Warren Thank you for the invitation and honored to be able to share information with your listeners. I am going to touch on the below topics:

1. Why an Architect is an essential part of your RE team

2. Building and Zoning codes - Common sense approach

3. Building violations - Before, during and after

4. New construction as an additional RE investment strategy

Hope to have a good turnout and share my knowledge with everyone!!

@Jonathan Klemm Thank you for mentioning me! @John Schulz Your question and predicament is quite a common one. Here is one way to answer it. Have you ever gotten a traffic ticket? What went through your mind? Were you not fazed by it or did you want to handle it right away? How you react to a potential "at fault" situation will help you make a decision. Some people are unfazed and let a building violation drag on as long as they can with a good attorney's help. Some cant go to sleep unless it is handled. Buying an investment property is supposed to be about numbers in a proforma. What one doesnt account very often for is the price of emotions.  If you get a bnuilding that has an illegal unit, chances are you will have to deal with it eventually. Just a question of when? My recommendation is to get a building that has an open basement. Understand the process of establishing a legal unit there and get it done eventually. If an opportunity only works due to the rent from the illegal unit, you have to account for what if you cant have it anymore. The summary is to be careful and understand the risks. Good luck! 

@Timothy Pauldon You would absolutely have to disclose the group home use to your landlord. I would encourage you to getting educated with the group home process and align with an agency before you venture on your own. It is highly regulated with high liability. Do not sign anything unless you get the legal portions figured out. So more than anyone I would recommend talking to an experienced attorney as a starting point. If you have some addresses where you want to start this venture, an Architect can perform a zoning analysis. Hope this helps. Good luck! 

Hello @Jeanne H. 

The answer is you get different perspectives from different professionals you would need to embark on a project like yours.  So contact everyone :)

One of my recommendations would be to contact the source who would review the work at the City of Chicago. In this case, I recommend Architect Joyce Ramos at the city of Chicago Landmarks department. She is very helpful and might give you all the insight you would need. PM me for her email address. 

The tax freeze part requires some preparation and quite honestly might not be feasible since a portion of the requirements is to keep or save the interior contributing features. I would have to look up some resources for you. Hope these are good first steps.

Prashanth

@Olu Owasanoye please contact @Mark Ainley for your property management needs. He is the most knowledgeable property managers and is able to to help you with all your property management needs. Hope this helps and good luck!

@Mark Ainley thank you!!

@Alex F. Garden units are interesting and pose somewhat of a unique challenge. You have to look at them from a zoning code and building code definition. Per zoning code, the ceiling height will determine if it’s a livable space. Next the distance from grade to ceiling of that level would determine if it is a first floor or basement. If the height from grade to basement floor is more than the height from grade to ceiling of that level, it’s typically a basement. In “garden” units, this is not the case and hence may be classified as a first floor. Zoning code trumps building code in the preliminary definition of the unit.

Once you establish of it’s a basement or first floor units, you could have a “three story” building instead of a two story building.

When it comes to a zoning certificate it’s mostly useless in context of a building permit process to establish legal number of units. As an Architect, I have rarely submitted a zoning certificate to prove legal number of units. Zoning department won’t accept it even though it issued it. It’s mostly for real estate transactions. So you want to get the historic water records or historic permits by applying for the freedom of information request. They are definitive proof of number of dwelling units.

Added to all this confusion, the city is working on ADU ordinance so everyone who has a basement could establish a legal dwelling unit.

My summary advise would be to hold off until the details of the ordinance are released or be prepared to convert your existing space to a dwelling unit.

When you are ready, do talk to an Architect who is familiar with the codes. My approach has been to save investors from making expensive mistakes!