Turning a residential multifamily into a commercial multifamily

[Alexander Wardell]

Hello everyone! 

I have a question regarding the process of turning a 4 unit into a 5 or 6 unit house by utilizing the unused 3rd floor. I am currently looking at a property, still the early stages and may not work out, but it raised a good question. It is currently a 4 unit, 2 units on each floor, and after my initial walk through of the property I noticed a HUGE unused attic that can convert into one if not two additional units.  Other than the cost associated with turning a gutted attic into livable space, what other issues may come up? I was curious about the process of having to switch a property from a 1-4 residential to a commercial property, or even other things to consider.  

This property will cash flow great for me regardless of if I add the additional units but it would definitely sweeten the deal. 

Any insight would be greatly appreciated! 

Thanks

[Rob Haines]

Any insight

• All you're really doing is adding living space, just like a garage conversion or garage apartment.
• Fundamentally this is prepositioning project, and is a solid strategy. The conversion from resi to comm + the added income could drive up the value dramatically.
• Your only real hurdles (in terms of proceeding with production) are zoning and permitting. Clear both of them and you're good to go.
• As far as zoning, you'll need to confirm required parking per unit based on available land. It's possible you may not have the land to meet the parking requirement for more units.
• It's also a solid plan because you can finance under residential and get the better terms. Better yet, live in it and finance as primary, then proceed with the reposition.

You could be sitting on a gold mine.