Turning 4-plex into 8 units?

Question

Hello,

I've been considering turning my 4-plex into an 8 unit building in order to increase cash flow. Is this a good idea?

4-plex is located in the Fort Lauderdale area, It consists of 2 duplexes facing each other, each unit is a 2 bed/1 bath so 8 beds and 4 baths in total and is each unit is being rented for $1500 a month

Lot size is 0.25 acres, zoning is RD-15 and land use code is multi family 10 units or less

I was thinking of building two more units on top of each duplex once our economy stabilizes of course!

Also, i have a mortgage on the property so how would that work? Will i have to get a construction loan (or cash), build and then refinance my current loan based on the new appraised value in order to pay construction loan? Also, the terms will obviously not be the same since it will be an 8 unit building and i will have to get a commercial loan. I currently have a 30 yr fixed at a 3.25% on the 4-plex and that will be impossible to beat. What kind of terms will i be able to get on an 8 unit building? Approximately, how much will it cost to build 2 more units on top of the existing duplexes?

Any advise will be greatly appreciated

Thanks in advance!

Matt Devincenzo · Answer

Most likely they are a past use that was prior to the current zoning...personally I'm not a fan of 'asking' the City. My experience doing this for a living, City staff at the planning counter level are your low level 'get some experience' staff. That is the last person I want 'diagnosing' my property...it's like getting a first year med student to diagnose your chest pains. That is in my opinion some of the worst advice I see given when people say 'go ask the City'...

Personally I would look at the code yourself, then if you think you are right you ask the planner questions like 'this is my research, would you agree I can build an 8 unit building?" Now if they say no, you have the ability to question their reason, "where did you find that"?

While it is easier for me to do this since it's my normal day job, these codes are written fairly simply. It's a matter of spending some time to read it, and then if it still seems possible you ask the City staff, and finally before proceeding too far you pay for expertise with a local engineer/architect that can point out the nuances and pitfalls you might not see.

Matt Devincenzo · Answer

I'm not familiar with Miami zoning specifically, but I'm guessing you likely don't have the zoning to support more units. The code is 10 units or less, but this isn't really applicable to a density assessment it just says what the property is being used for. The density is generally what is important and RD-15 I am guessing is 15 units per acre (that's how many areas specify densities). If that is the case 15/ac * 0.25 ac = 3.75 units which often MFR densities round up (SFR often round down). So that means you are already maxed out on your density at four units.

If you want to research this more look in the City municipal code for the "density calculation" section and see what it says.

Greg Dickerson · Answer

The best place to start is with planning and zoning department to help you understand if you can do what you want to do and the requirements and issues like sprinklers, parking, setbacks, lot coverage utilities etc. You want to seek to a planner, zoning administrator and building official for code issues. You will need to talk with a local builder to help determine feasibility and rough ball park estimate of construction costs. Once you have some idea of costs and feasibility you can then discuss your options with some local banks. Rates are all over the map right now so you probably will not be able to beat your current loans terms but things are changing fast so make sure to shop several local and commercial banks.

Sil Ripley · Answer

I would say that’s an even worse idea than asking a City L&I counter person the question. You are now downgrading from being diagnosed by a first year med student to self-diagnosis.

Depending on the location a 4 plex to an 8 plex zoning density variance can be a potentially lengthy and complicated process with no guarantee of success. 1. It would involve a Zoning board review and could be rejected based on current zoning laws with regards to density and in your proposal mentioned above by height restrictions set forth by the local zoning code. 2. A legal appeal to a rejection would be need to be submitted by a Lawyer who specializes in real estate at $400 - $600/hour. 3. The Zoning board would also most probably be required to hold a public hearing regarding the matter with the surrounding neighborhood, and a negative reaction by a organized neighborhood Association could heavily influence the zoning decision 4. It would also involve review by the planning and the streets commissions with regards to the impact of parking density and traffic, who could also reject the zoning variance application on those grounds. Appeals can be mounted, but again YOU pay same legal rates as above. 5. If your zoning application WAS approved, you would then have to submit signed and sealed alterations plans by a registered architect that demonstrates that the conversion meets all current codes, including existing building, Architectural life safety, Electrical, plumbing, mechanical, energy and fire protection. It may not even be feasible to increase the residential occupant load of the buildings based on how the subject buildings construction is classified, number of means of egress, widths of egress, etc etc etc, Yada, yada, yada...~ OR ~

You could hire a Registered Architect who could provide you with a professional feasibility study and report regarding your modification proposal that would take the above factors into considerations and give you a sharper insight of what you can and cannot do.

And if you can eventually proceed, you could retain that architect to be your “professional building advocate” to protect you from all the massively shady things that have become the new norm in the residential construction contracting market, from bait and switch low-ball initial contract pricing (which then explodes using the old “change order” routine) to the contractor simply not installing what you paid for, especially in the places you can’t see. Today’s residential construction in many areas ends up as essentially a cardboard box covered with cheap stucco that will bleed you white with constant maintenance issues because most of the time the construction won’t be “professional”. It’s is in no way reputable any more in many instances.

Pay now or pay later...plus construction is like sausage: you don’t want to be around when it’s being made. When an inexperienced layman trys to GC a medium size project with the attitude “how hard can it be?”, ending up divorced is always a possibility....😳

Alejandro Valdes · Answer

@Matt Devincenzo

Thanks again Matt, that’s exactly what I’ll do. I will research and learn as much as I can about zoning and codes before asking the planner and if I’m right I will pay a local engineer or architect to guide me before moving forward.

Alejandro Valdes · Answer

@Matt Devincenzo

Thank you Matt! I will have to go to the city to find out for sure

However, right across from my building there’s a 10 unit building that has the exact same square footage and is also RD-15

Turning 4-plex into 8 units?

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