About a year ago I purchased a duplex in North Oakland and have been successfully house hacking it. The upstairs units rent pays the mortgage and a little extra, so I'm really only on the hook for a portion of the taxes and insurance, and that amount is a net decrease from what I was previously paying in rent. If I stopped house hacking and just rented the whole building it would cash flow at conservatively $12k/yr. My plan when purchasing the building however was to ultimately development the basement into a third unit and turn the building into a triplex. Before finalizing the purchase I called the planning department and spoke to them of potential plans and they confirmed that I was able to do that and the building was zoned (I think RM-2?) which allows for that. An architect that I recently sold something to on craigslist spoke to me about it just out of curiosity and said that due to location adjacent to the freeway and close to bart, it would likely qualify for some sort of transit oriented density bonus, possibly allowing me to build even more units (though logistically I'm not sure how I would add more than a single unit without dramatically altering the structure of the building by raising it or something similar).
The building has dirt floor basement with a ceiling height of 8' 4" and runs the entire dimensions of the house making it about 1,200 ft2. My understanding is that basement units must have a minimum floor to ceiling height of 7'6". Assuming a 4" concrete slab for floor and a 1/2" of gyp board for the ceiling that would effectively give me a height of 8' 1/2" which acceptably checks that box. There are some structural considerations with the way the previous owner dug out the basement to achieve that height, so I've engaged with a structural engineer to work those out and have a visit scheduled for the middle of December.
I'd like to keep some amount of storage area in the basement for water heaters, maintenance equipment etc. so am targeting roughly 1,000 ft2 of habitatal space and a 200 ft2 maintenance room with no finishes. Using ROM construction costs of $250/ft2. Is that a reasonable cost projection given a mid range rental unit target? I'm actually thinking this is somewhat on the conservative end given that I will be most likely be GC'ing the project and self performing some amount of the rough and finish work myself and with personal contacts. That gives me a rough project cost of $250k. Tentatively planning to finance through some combination of a professional income and a HELOC, which will then be refinanced into a more permanent debt structure upon completion and leasing.
Wondering if anyone here has any experience with type of project and could give me helpful insight into potential pitfalls, lessons learned, professional contacts (looking for an architect experienced in these types of builds currently if you know one let me know!), or really anything you think might be useful in this endeavor. Thanks!
