4 units - Unknown it Legal

[Steve Mitrano]

I live in the Boston area and I’m looking at making an offer on a 4-unit property that has every indication it is a true 4-plex (4 main entrances, 4 identical layouts, 4 gas meters, 4 heating systems, 4 electrical meters/panels + common...but there is no record of it ever being a legal 4 plex. Just wondering if anyone has ever had a similar experience and how you handeled it? Red flag or go for it?

[James Masotti]

Originally posted by @Steve Mitrano:

I live in the Boston area and I’m looking at making an offer on a 4-unit property that has every indication it is a true 4-plex (4 main entrances, 4 identical layouts, 4 gas meters, 4 heating systems, 4 electrical meters/panels + common...but there is no record of it ever being a legal 4 plex. Just wondering if anyone has ever had a similar experience and how you handeled it? Red flag or go for it?

 This happens all the time in my market of Wilmington, DE. If it's an occupided property than ask the owner to contact the city zoning office for a copy of the approved zoning variance. As the existing owner they should be allowed to have access to this information even if they have to pay a small processing fee. If the property is vacant, bank owned, or the seller just refuses than you need to contact your city zoning office and see if they'll provide you with the zoning variance. If they say no, then you need to ask them if having the property under contract would permit you access to that, if they say no again, then you need to ask about filing a freedom of information act request. Usually this will take weeks to do, so if that's the case you can either put it under contract with a contingency on receiving this information...or wait to put it under contract until you get the information.

Some people may be willing to take the gamble or have the systems and processes and money to make it work on their behalf. In my market I see way too many people purchasing unapproved multi-family buildings only to be told they need to spend 10's of thousands of dollars to convert the property back to single family. Personally I think the city is stupid for doing this because it's going to put the person out of business or they'll just let the property foreclose and go vacant, and Wilmington DE has enough problems with vacant properties...nonetheless it's what they do, and it costs the uninformed investor a bunch of money when they make the mistake.