Adventures with a Waldo

[Chris Gillins]

OK BP, Here's the situation, I am looking at a property to purchase in Vancouver, WA as my primary residence with a separate unit upstairs that I want to rent out, and then hold onto the unit as a rental.

2/1 on the main - 937 SF

2/1 upstairs - 761 SF

Unfinished Basement attached to main - 960 SF

Asking price $175,000

The price is fairly comparable to the area and I am planning to go with a 203K loan. The construction company I work for has agreed to be the General Contractor on the project, so that I can do a lot of the work myself, which I love.

The house was originally built in 1925 and needs updating, the snag I ran into today is there was a previous offer on the property going with FHA, and apparently at closing the FHA agent decided the upstairs was not a legal duplex and instructed that potential buyer to gut the kitchen. I have a call into the city planning office to find out what will be required to bring the property into compliance.

I think finishing out the Basement to add 2 bedrooms and a bath and redoing the main to open up the kitchen and put in a master suite would enable me to get an easy $1000-1200/mo rent for that unit, the upstairs goes for $800-850 in this market. Not quite 2% but it would be a good primary to get student loans paid off, and start flipping.

Question, anyone had experience bringing a non-conforming property into legal compliance as a duplex, any advice on the process, or will this just be a nightmare not worth looking at. Been having a difficult time finding a duplex to live in that the family agrees on, in the budget. Our other option is buy an SFR flip with the 203K and cash out refi after 1 year and start flipping...