Ask Me Help Desk - Convert single fam home to duplex/rental

I'm looking to purchase a home for my mother and her sister in Iowa, US. Mostly for personal reasons, but also some investment potential. The home would need to be a duplex or have separate apartments up and down.

Most duplexes in my area are too large for their needs and financial means. One option is to buy a single family home and convert to a duplex or a two apt home.

I own a home, so I'm familiar enough with the typical buying process. But what about the purchase of a home with the intent to rent? I understand its common to need more down and the %s are higher and insurance is higher...

... but what do I need to do to convert a single family home into a bldg with two or more units for rent?. not physically what needs to be done to the property, but what needs to be done with the local gov to properly classify this home as a multiple rental? How can I be assured I can do such a conversion before the purchase? Questions for the county assessors office?

Any structural issues I'm comfortable enough with, or have someone I trust to address it... it's the legal details I'm fuzzier-than-normal about. The more I look, the more I'm certain I'm likely going to need to do a conversion.

Also, any useful resources for details such as this that you've used? There are tons of books out about buying investment properties, but none I've seen cover some basic dirty details like this.

Thanks in advance.

The place I would start is the local Building Official or Code Enforcement Office, as they will know exactly the path you need to take, such as Planning and Zoning Board. These offices are sometimes combined .

Either the Building Office and/or P&Z will have a map of the town or city on the wall showing exactly how the municipality is "zoned" for the various categories, such as light residential, commercial, industria, and if any are combined. Some areas may allow light commercail and residential in one area. Some areas may only allow single famialy dwellings.

They will tell you if the area you want to create a duplex is zoned for multiple family dwellings. Once you know if this plan is allowed, not much more left than actully splitting the utilities into two separate metered service, ie: electric, city water, and natural gas utility.

The Building Dept can also help with the floor plan requirements, such as what is needed so that each unit has two fire escape egress paths.

This is my experience in central Ohio. The only easy part of your issue is the financing and insurance. No pat answers, but just my experience and thoughts on it.

Quote:

Originally Posted by kp2171

i own a home, so im familiar enough with the typical buying process. but what about the purchase of a home with the intent to rent? i understand its common to need more down and the %s are higher and insurance is higher...

Insurance is about the same per thousand of coverage. As for financing, the one thing I've learned over the years is that there's almost no such thing as "rule of thumb". Shop around. Try smaller banks and Savings & Loans; they are generally more creative. When I'm shopping for a loan I always call
1. a loan broker,
2. my personal bank
3. Two small banks

... and the truth is, I've always meant to try Ditech, but never have. Can't hurt to try them.

Quote:

Originally Posted by kp2171

what do i need to do to convert a single family home into a bldg with two or more units for rent?...not physically what needs to be done to the property, but what needs to be done with the local gov to properly classify this home as a multiple rental? how can i be assured i can do such a conversion before the purchase? questions for the county assessors office?

any structural issues im comfortable enough with, or have someone i trust to address it... its the legal details im fuzzier-than-normal about. the more i look, the more im certain im likely going to need to do a conversion.

In my area this is next to, if not fully, impossible. Not physically impossible, but so time consuming and expensive that the result is that you'd have twice the amount in the place than it's worth. Just the firewall alone would be an arm and a leg.

I can't imagine how you'd get any guarantee at all. The process would be to have an architect who knows local code draw it all up, then present it to your local Code division for approval.

If approved, you'd no doubt need a permit for every little thing - and licenced people doing all the work.

Quote:

Originally Posted by kp2171

also, any useful resources for details such as this that you've used? there are tons of books out about buying investment properties, but none ive seen cover some basic dirty details like this.

This subject will be completely a local issue - since all of it would hinge around what the city would allow, so you likely won't find a book or website that walks you through it.

If it were me I'd scrap the idea of a conversion. I'd get a Real Estate broker to send me listings for all the parameters I need. Most do it online nowadays.

Tell them you want to see all 2-unit places of X max price, in ***** zip codes - and any other parameters that are important.

... and what about single family homes with "mother in law suites"? If that would work, have the broker send you those too.

I'm surprised to hear you saying you're finding 2-unit places too big. Around here they are very common from 600 sq. ft. per unit on up.

Regardless of what angle you pursue, I'd definitely get an investment property real estate broker involved. He'll have the same listings as any other broker, but he'll know more of the ins and outs of the investment property angle.

Quote:

Originally Posted by RickJ

I'm surprised to hear you saying you're finding 2-unit places too big. Around here they are very common from 600 sq. ft. per unit on up.

I have seen some smaller unit duplexes, but they have been more scarce than other larger units so far. If I had to convert I expected it to be more of the up and down apts in a 2 story home, not conversion to a duplex...

Thanks for some great advice. Some of it I suspected, some I didn't know.

I've got a meeting with a friend who has done some of this work and has contacts in real estate.

What is required as a construction point of view to divided a single family home to a pultiple rental unit, for instant type of doors finishing interior
Fire excape etc.