Converting a 4Plex into a 5 unit

[Barima Opong-Owusu]

Hi I have a scenario where I'm planning to rehab a 4 unit property. The lender I was planning to work with did a ARV appraisal based off of comps of 4 units in the area which because of 1 comp came back lower than expected. To provide more context

- Sales Comps $319,000

-Income approach: $389,000

Cost Approach $390,000

The property is currently zoned R3 which I've included below. My thinking now because the property can support it would be to create a 5th unit in the basement since it was already started down there by the previous owner.  If I add a 5th unit based on the income approach I would be able to get a valuation well into 400K+ which I need to pull out some most of my initial investment. Would I have to worry about rezoning or it would just be dependent on me finding commercial lending ?

Zoning District

Low Density Residential District (R3)

This district is designed as a low-density multi-family district. The regulations are designed to promote and encourage town and terrace house development, courts, and garden apartments. It is intended that this district be used primarily on local thoroughfares thereby encouraging a suitable environment for family life. Among others, uses permitted by right include single and two-family dwellings, town houses, multi-family dwellings, and community facilities necessary to serve a residential district.

Land Use Code

Multiple-family dwelling

A structure, located on a single lot, containing three (3) or more dwelling units, each of which is designed for or occupied by one (1) family only, with separate housekeeping and cooking facilities for each. Multiple-family dwelling for the elderly is defined as any such housing regulated by the U.S. Department of Housing and Urban Development under its program pursuant to Section 202 of the Housing Act of 1959, as amended, 12 USC 1701 et seq.