Buying an illegally zoned property

[Greg Ressler]

Greetings all, I'm currently looking at a house that I really love. It's in the area I want to live in, and it's a duplex! Exactly what I'm looking for! Plan would be to live in half of the house and rent the other which would cover the mortgage/insurance/taxes... Great Deal! Here's the catch. When I went to see the property I was hooked! Updated and in great condition. When looking to get a conventional mortgage, I realized the house is residential single family zoned! This illegal conversion to a duplex has led me to loose the ability for a conventional mortgage, and I'm not I have enough cash to have the down payment for a commercial loan. I do have another property that I currently live in, but it's not appraising high enough in an exploding neighborhood because it is a unique property. It has two separate houses on one deed and it's creating a large cash flow every month while renting. There's no comps in the area like it and even after rehabbing both places the HELOC just doesn't seem to work. Questions: What's a good source for finding a 20-30,000 loan for 3-5 years? Any thoughts or ideas on interesting ways to make this deal work? Can I talk directly to the Owner and try to work a deal out with them? Almost a rent to own idea for a year until I have enough cash for a commercial loan? Plan would be to acquire the house, and immediately apply for re-zoning to make future sale and HELOC more possible. Thanks for any input!

[Mike McCarthy]

I'll leave the loan question to those more experienced with non-conventional loans...

But have you considered what you'll do if you can't get the property rezoned? Will you be ok converting it back to a single family?

I don't know what your chances are of getting a successful variance, but it seems a long shot if you are in a sfr area.

Also, have you looked at costs to re zone?