Funeral Home converted to a Duplex... Red Flag?

Question

Hi All,

Looking at putting an offer on a property that was previously run as a funeral home. Highly motivated seller who just wants it gone (with little movement/interest on the market) so I am able to purchase it at pennies on the dollar.

I walked the property and its in good overall condition. windows, trim, furnaces, floors, roof…all in good condition. With a couple modifications, I believe the exterior would looks just like a standard duplex; however, the inside would be a pretty unique rental with open concept and high ceilings (10 ft). Looking to convert it into (2) 3 bed, 1.5 bath with 1600-1800 sq ft per unit.

Purchase: 85k

Rehab: 85k

ARV: 230-250k

Rent $2400 ($1200 per unit)

Am I nuts?? Will anyone want to rent it if it was previously running as a funeral home? Or is this a unique/creative was to find a great BRRRR deal?

Russell Brazil · Answer

Chad Huffman · Answer

Nobody died in a funeral home. I own a building that was a former hospital in the early 1900's, that has been converted to a tri-plex. It's a small town and the locals all know it was the hospital. I would assume, MULTIPLE people died in that building. I've never had trouble finding tenants.Give it a try and then update this post in 2-4 months and tell us if you experienced any problems finding your first set of tenants.

Ryan Duphorn · Answer

Haha love this. I currently rent a former funeral home with a couple of my roomates. Obviously you would have to get it zoned residential which seems like you already got a hold of this process. I'm sure there are enough crazy people out there who would rent an old funeral home... like me! Haha all jokes aside, the numbers line up for you. My landlord had no problems filling this rental with tenants because it's on our college campus. Coming from a tenant who is living in one, I have no issues with it being a prior funeral home because rent is cheap, the remodel done is actually very nice, and I'm a college student so what the heck do I care! Glad I came across this post - got a good laugh out of it. I say if the rent price is reasonable and the renovation is done correctly, you should be able to fill it. Not sure of your area but maybe gear your marketing efforts towards younger, college students? Best of luck!

Julio Garcia · Answer

Sounds good, but i would first check with the county that this is zoned-residential home and not a business. In my neck of the woods, unless its mixed used zoning you cant live there.

Cody L Readinger · Answer

Would love to hear how this turned out. I just closed on a former funeral home in Eastern PA - was previously converted into a duplex. I plan on remodeling it, adding a few bedroom and updating a few other things. Any luck on not making it look like a funeral home? Any troubles?

Lynnette E. · Answer

Awh, you missed the news a few months ago. There was a person who was asleep in the funeral home after working extra hours to keep up with the cremations. Unfortunately, the person on the next shift put his sleeping body in the furnace and he screamed at it burnt him to death. They could not turn it off fast enough to save him. And the worker admitted he did not look for a toe tag, just put the closest body in. I bet his spirit is still haunting that place!Only issue you may have is that some people who practice some Asian types of religions may not want to rent the property. However if there is not a large Asian population in that area that you would be marketing to, no concerns. (BTW, I am not saying this to be raciest, but to pass on what I learned when selling my parents home in CA. Both died through hospice in their home by their wishes. They did not want to die in a hospital with machines. The realtor put in the mls that there were hospice related deaths in the house so we did not waste our or potential buyer's time,)

Steve K. · Answer

@Jeremy Mattson the main red flag I see is the rehab budget of $85k. That might work for a light rehab, but if you’re reconfiguring walls, adding new kitchens and baths etc., then $25/ft2 probably ain’t even in the ballpark. I may be jaded though as contractors are getting $250-400ft2 in my market, and people are paying hundreds of thousands on just their kitchens. Your market may have less expensive contractors available, but I just can’t imagine redeveloping a funeral home to a duplex for $25/ft2. I’d think it would be closer to a full gut rehab pricing, minimum $150k-200k. Without seeing the property that’s a WAG obviously, but sharpen your pencil on the rehab budget as $85k will go real quick on something like this.

Julio Garcia · Answer

Run it brother! Best of luck.

Jeremy Mattson · Answer

Thanks @Julio Garcia! You are correct. I talked to the city this morning and it sounds promising that I could get it rezoned. Its a 6 week process and would cost $100 for the application. I can submit the application as a "petitioner" (not the property owner) and I would also make my offer contingent on the successful rezoning of the property.