SFR conversion into duplex?

[Steve Kuzmer]

Hi BP friends. I have an idea to throw out there and get some feedback on. I am in the Tacoma / Puyallup Washington market and we are facing a rental shortage in my area. Rents seem to be moving up apartment complexes are taking deposits just to get on a waiting list. Anything that becomes available is usually gone within 24 to 48 hours. My idea is to buy a small single-family house in the $150k to $200k range and add a duplex on it. Most of these houses are about 900sqft. We would gut it down to four walls add a second floor and a second unit onto the back, making it a very nice duplex. I still have to meet with a GC to develop a billing plan and estimated construction costs. I would like to develop a design I can use from project to project. My rough idea is $200k in costs bringing total property cost to $350 with a min 70% LTV. Rents would be in the $1550 each unit range. I still have a lot of questions to ask and get answered. What do you think about this idea and any one out there with this type of project experience?