Accessory Dwelling unit and a triplex scenario Salt Lake City, Ut

[Ben Visser]

I hope this is the right place for this. It is strategy and construction all rolled into one. First my home and then the triplex.

My Home

I've been house hacking. Renting out my basement rooms to cover my mortgage. Current w2 income covers expenses, child support, etc, but leave only a small amount for savings so financing all of this will take some thought.

My challenge is that I need to get 1 more bedroom in the mix with 2 sons growing and needing their space.

My home is in the very narrow part of the city where accessory dwelling units are allowed and I have enough land to do it. There are a few limitations: 17' height and 480 sq ft of roof area allowed (50% of main dwelling). I do think I could get a variance to go to 20' and stretch it to 500ish sq ft. I can also go into the ground if I need to and it makes sense to.

• Scenario 1

On the current home, there is some attic space and I could feasibly move the master bedroom into the attic, but it would require running and enclosing stairs off the back of the home to get up there. We would then build a single story accessory dwelling unit to maximize the rents on the property.

• Scenario 2

Build a 2 story accessory dwelling unit that would have the space we are looking for. Complete a kitchen and walk-out stairway in the basement in existing home and rent the main home as an upper unit and lower unit or by room.

• Financing:

We owe $148k and the current home is valued around $225k. We could get a line of credit up to 90% potentially (higher rate than 80% LTV) towards funding it or could look at a construction loan/refi to cover the cost.

• Question

Which route makes the most financial sense? With construction costs is it substantially more to do a 2 story and leave the main alone or is it more to do an attic AND an accessory dwelling?

Duplex/Triplex investment

We own a duplex in Ogden, Utah. It is 3bd 1 bath on one side and 1 bd 1 bath on the other. Zoned r4 (4 units). We just bought a small parcel that gives us the right amount of square feet to meet code to add a 3rd unit detached. It is a deep lot and we have a lot of space to do it. We would want to do detached as the existing home is 125 years old and I'd rather not have to worry what we could find when trying to attach to it.

I've had the thought to build a 3bd 2 bath unit in back. I've also has the thought to maybe build 2 3 bd 2 bath attached units in back and then convert the main home back to SFR (cutting out the old door space that once combined the units shouldn't be a huge undertaking). From what I understand of the code, we would be satisfying the 3 unit max allowable per our land sq ft, but then I would have 2 3bd 2 ba units and 1 4 bd 2 ba unit. Rentometer shows average on 3 bd would be $950 and average on 4 bd $1400 for 4 bed.

• Scenario 1 total rents= about $2500 (950 new, 900 old, 650 old 1 bd)

• Scenario 2 total rents= about $3300 (950x2 new 3bds, 1400 old converted 4 bd)

Current loan $87k, value estimate about $138k.

Estimated cost to build is $125 sq/ft in this area. I am thinking I could GC this to save some on the costs.

What would you do and how would you finance it? And in what order would you do this and why (home then the investment property, or vice versa)?