Converting a single family into a multi unit has the potential to be a great investment, in which you can significantly improve your financial freedom. But before I begin this article, I want to emphasize that this process is not for the faint of heart. It also has the potential to be arduous beyond measure if you don’t exercise due diligence.
So if it’s so much effort why do people do it? Well apartments with fewer bedrooms typically rent for more per tenant. Renting one unit while living in the other is a great way to incur passive income and lower your monthly mortgage payment. Multi units are also ideal for short term rental platforms like Airbnb, where owners can often attain a higher ROI than traditional long term rentals.
There’s a crucial difference between looking to convert a house you already own, versus looking to buy a home specifically to convert it. When you are buying with conversion in mind, you can look for certain attributes that make a property an ideal candidate. These include multiple entrances, multiple bathrooms and a room that can be converted into a second kitchen.
Now that you know what the benefits are, what does it really take to complete the conversion? When it’s all said and done, your biggest expense may be time. You will also want to create a budget. Will you need to borrow from your bank? Be careful because in some rare cases, banks consider multi units to be worth less than single family homes.
The first thing you must do once you’ve found the right property is to look into zoning. It’s illegal to complete the conversion without the proper zoning and getting your zoning changed will greatly differ depending on state and county laws, so make sure to check the laws before making any purchases. In some cities it’s simple paperwork, in others it’s a long and expensive process.
Once this is done and the property is purchased, you will have to apply for permits to begin the work. It’s a good idea to utilize the assistance of an architect or contractor to tell you how much the conversion will cost. Not only are there expenses that come with conversion, but if there are general repairs needed, it’s a good time to complete those as well, as every month the house goes without tenants is a month where money is lost.
This renovation will include creating separate meters for electric and gas, which can be expensive depending on who you hire.
You will also need to make sure that each unit has its own separate entrance. Depending on how you want to lay out the units, this might require building additional staircases.
If you’re in the right town where the zoning laws aren’t too stiff, and you find a single family large dwelling home at a good price, then the opportunity just might be there. Always remember to double back and do your research to avoid any unexpected costs. If you need assistance in finding the right property, feel free to reach out to one of our agents at Castles Unlimited or call 617-964-3300.