Converted vs. Intended Multi-Family Properties

[Kate Kedenburg]

Hey everyone!

I'm interested in the some input on the idea of "converted" multi-family properties vs. "intended" multi-families. We have recently moved to the Tacoma, WA, area, and in my search for rental properties (2-4 units), I've noticed that especially in some of the more established neighborhoods, there exist a plethora of properties that were built as SFRs but over time have been converted into duplexes, triplexes, and 4-plexes. My husband and I aren't seeing 100% eye to eye on the idea of investing in properties like these - he wants to stick only to properties built as multi-families, while I am more open to the idea of these converted SFRs.

Help us settle the discussion! I know there can be serious issues with older SFRs that have been converted - on some of the podcasts I've heard stories about inadequate plumbing, electrical, sewer(?) issues, etc... what else should I know about regarding these converted properties? Does anyone have any success or horror stories that can help me solidify my position or change my mind? Tips for estimating maintenance reserves, anything at all that you think might be helpful!

Thanks in advance, everyone! 

[Colleen F.]

Always for Multifamily you need to look at  the main systems (heat, electric, water) and see how they are separated.  In a converted multifamily this can be more haphazard then in a built for purpose Multifamily but in both cases you still need to look at these systems.  Keep in mind building quality can differ even when something was built as a multifamily.   We have a nice converted MF but  there is shared heat (a negative) and shared water (a negative).   Electric is separate.  The structure itself is solid though.   I  think it is more about how well it is done then whether it was built for that purpose.  I would find out what worries your husband about the conversion and review the properties for that aspect. If he worries about paying for heat ,  or the quality of the electric that is a better focus then looking at "converted" vs "non-converted".   Also the older the units the more reserve for surprizes you should have regardless of whether they were converted.