How do I convert a SFH/Business to a MultiFamily dwelling

[Marc Estepa]

Hello BP Fam!

In my search for SFH investment properties, I came across an interesting property that also doubled as a business. The numbers caught my attention because they would work as a SFH with a few updates and converting the business side to an ADU. But it got my wheels turning even more.

If the property doubled as a business and a residence, I’m assuming this means it’s zoned for commercial and residential.  

Can I level the existing property and build a 4 Plex in its place?  I never studied how this works cause I’m new to investing and viewed this as an advanced strategy.

Theoretically, how do I run numbers on this type of project?  The numbers for this property are as follows:

1. Purchase price: $385k

2. 2 Bedroom, 2.5 Bath, 1540 sq ft 

3. Lot Size: 6500 sq ft

4. Business side has 4 parking spaces separate from the home’s 2 parking spots with room for storage.

If the goal is to tear it all down and create a multi family 4plex in its place, what are my first steps to doing a project like this?  What are the costs I need to take into account - Demolition, Architectural design, New construction?  What are all the hard costs and soft costs associated with this?