What S Your Opinion
hi, i am a newby to this site, but have some experience with rei, i have done a couple rehabs and flipped them for profit. i have done decent on my own without any coaching or experience, this will be the first time i have asked anyones opinion, so be gentle. ok here is the deal im looking at a repo valued at $100,000, the list price is $50,000, needs roughly $10,000 in repairs it is zoned r1, i would like to keep and rent it out, rent in the area is roughly $700.00/month. it is a 4 bedroom 1 bath home. i am going to add a bathroom upstairs, then i thought why not add a small kitchen as well since i will be runnig the plumbing anyway. so now i am considering a 2 family unit. without much alteration to the original floorplan. i am thinking a pay by the week rental where upstairs would be $150.00 per week utilities included, and the downstairs would rent for $175.00 to $200.00 per week utilities uncluded, both would be 2 bedroom 1 bath, eat in kitchen and living room, the main problem to this idea is it is zoned r1. either way i will add a second bath, mainly for resale value as a sfh. it can be converted to mfh easily by blocking off one door way. i would pay the utilities mainly because there is only one meter for each of the gas,water,electric. i dont really want to go through all the hasle of getting it zoned r2, i would rather rent it and make some $$, if i get caught pay the fines, and then maybe convert back to a sfh and sell, for a profit. what do you think.
Kjc1517:
I am also new to this site, welcome.
However, I have been in the construction business about 40 years. If you are making 25 & 10 on your rehabs, why would you ever become a landlord?
Just my opinion.
Good Luck!
Frank
deals for me are far and few in between, this just sounds like a way for me generate cashflow, have an appreciating asset, a declining principle and ultimately more profit. i dont know, give me your thoughts.
There a ton of things to consider, too much to go into any great detail.
When doing any rehab, you don't want to over rehab for the neighborhood. So, will adding a 2nd bath help the resell? Usually it won't matter much unless you make a master suite type deal, and then that's only if the neighborhood supports it.
Since it's zoned r1, I doubt that there are many rentals in the area, and not any multi's. Definitely something to consider as it may be tough to find renters AND you'll likely make the neighbors mad by converting it into a duplex. Not to mention the fines if you do get caught. I wouldn't recommend doing it without rezoning, but if you are, I'd at least confirm the maximum penalty before committing myself to the project.
Will a weekly rental work in your market? Will it work for this type of property? Also, weekly rentals make more $$$ on paper than monthly, but the people who rent weekly are very transient (ie they move alot). That's why they like weekly's, they can pack up and be gone within a week. Tenant turnover will be high. And no offense meant to anyone, but weekly renters are often, how should I say it, "carefree" with their surroundings. In other words, expect higher than average repair costs between tenants.
Finally, converting back to a single unit and selling my not be as easy as you plan. By adding a 2nd kitchen, you'll be making an "odd" single family. Odd/special purpose houses tend to sit on the market longer and sell cheaper than a comparable "normal" home.
Roger
I totally agree with Roger. I would not convert the property into ilegal duplex. Like Roger says, you will have hard time selling this property, when you need to.
there are duplexes in the area, a block away, not on this street though. most of the comps i have show that the homes sold in this area have 2-4 bedrooms and 2 3 bathrooms some had only one, i believe adding the bath will increase its value, not to mention make it compete with those that do have a second bath. as far as the second kitchen is concerned i was thinking a few cabinets a small stove, fridge and a small sink all on one wall. all utilities hidden inside the wall, so if i ever removed it all it would take is some mud to hide the holes. what is the fine for something like that? my biggest concern is the neighbors, i dont want them mad. maybe a 1yr lease equal to the weekly rent but monthly, would yeild better tenants, as far as available tenant are concerned, i think the demand is there. there is an apartment building a block away, several duplexes within a few blocks, and there is a trailer park less than a mile away. how hard is it to get it rezoned anyway? thanks
ok, so dont convert it into a duplex, what would you recommend for this type of property. thanks
any opinions, any? thanks
Any way you can make 25 & 10 or more I believe is the way to go.
Frank
I would definately add another bathroom, if I were considering selling it right away. If you are planning to rent it, just try to make the property nice, clean, and everyting in working order.
Second baths are gold. I would definitely consider that.
Q: "how hard is it to get a property rezoned anyway?"
A: It depends. (Don't you love that response?) But it's true--it depends on a number of factors.
(1) Contact your city zoning dept--they likely have a handbook outlining the process. In some jurisdictions it is a pain, while in others the bureaucratic side of the process is relatively painless--"development friendly" jurisdictions tend to be less painless--is your city generally considered development friendly?
(2) Usually, there is a public hearing on any zoning request, with notices sent to all the neighbors. So, if some if them didn't like the idea of a duplex, they could show up and protest.
(3) Get a copy of the local zoning code and look at the definition of R1. There may be exceptions to the "single family occupancy" rule so that your duplex conversion is permissible. Don't just assume that R1 means you can't do it--you never konw if there's an exception if you don't look. (Although, maybe you have already.)
(4) In your rezoning application you're probably going to have to address all kinds of issues, such as: How will the proposed change affect the character of the neighborhood? How will it affect traffic flow? etc.
(5) One other problem with doing the conversion without getting it rezoned is that you will have installed a kitchen without proper permitting an inspections. When you think about possible fines, include this one. That's a particular type of renovation that cities absolutely want permitted b/c of the potential for fire. It's also the kind of thing that, if you did it without authorization the first time, inspectors look at with a fine tooth comb if you're ever forced to bring it up to code.
(6) Check with your insurer: Will they even cover a property with an improperly zoned addition (esp with kitchen)? Expecially the kitchen poses considerable extra risk for the ins company. If there is a fire, expect them to deny your claim.
(7) Again, if there is a fire (or some other injury arguably due to your workmanship), you will be liable. Having a building permit won't protect you from liability, but not having one certainly could be a plaintiff's argument for shoddy workmanship (whether true or not).
Anyway, as I reread this post, it sounds pretty depressing and critical. I don't mean it that way. My only point is to say that there are broader questions to ask than just how much of a pain will it be to get rezoned. Best of luck.
your right, i dont think that an illegal duplex is the way to go, i think maybe a flip is in order here, the profit potential is there, so why not? the house will need new paint, carpet, subfloor in kitchen and laundry, new cabinetry and counters in kitchen, new vinyl in kitchen and laundry, replace patches of drywall here and there, the upstairs currently has 3 bedrooms and two hall closets, im thinking of turning it into a master suite, the larger room being 12x16 will be the bedroom, the two others being 9x8 will be a bathroom and walkin closet, the downstairs has 1 bedroom, living room, kitchen, laundry, bathroom, and a 12x 13 family room, i was thinking turn the family room into another bedroom with walkin closet. the kitchen is 12 x 16 and the remodel will leave enough room for a dinning area. these upgrades wont make it better than area housing, but i think it will make it compete. i think i can do it all for under $12,000.00. fmv= $90,000-$95,000, asking price $50,000, i think i can get it for $40,000. sound feasible?
In New Jersey planning and zoning would take from six to nine months, then add an engineer, a lawyer, property taxes, etc., etc., etc.