Convert a duplex to a triplex?

[Matt Heaton]

I am new to the multi-family rental world. I am looking at a property in a small market. It’s a duplex currently being rented half long term and half short term. The garage has been converted to a game room for the short term side. The current owner poured a pad behind the garage to add onto it but never went vertical. I would like to hear any advice on this as to things I may not be considering. Here is what I want to do.

-Buy

-Renovate the short term side by walking off the garage

-Go vertical on the pad behind the garage and tie it in to create one unit which will end up being 1350sqft.

-Add walls to creat 3 beds

-Add two baths

-Add a kitchen

-Add HVAC to the unit

This property also has 1/2 acre behind it that I can add another multi family unit (3 or 4 plex).

What CAP rate should I be seeking?

What should I be considering from a legal and zoning standpoint?

How would you finance this?

Thanks!

Matt