My house needs to be owner-occupied in order to rent the 2nd unit? (Long Island, NY)

[John S.]

I was recently passed down a family home (Long Island, NY). The home was originally a single family build, but since we had more family coming from overseas my parents built an upstairs accessory apartment 30+ years ago (with legal building permits) to accommodate all of our family.

Both units have separate entrances, separate electric meters, full kitchen/bathroom, and 3 bedrooms each.

Since it was always just our family living in the house, we never bothered to get a rental permit with the town, since any rent being paid was kept within the family.

Fast-forward to now, I've been living in Unit 1 and renting out Unit 2 to tenants. They pay cash, since the process for the rental permit seemed like too much of a hassle at the time, so this rental is being run "under the table".

I've made the decision that I want to go full-time w/purchasing additional rental properties, and I plan to do everything strictly by the book, with all proper permits, income reporting, etc., so I decided that it's finally time to get everything in order w/the town.

I reached out to the town from a dummy # to ask a few questions about making my current rental legit, and I was basically told that since the house was originally built as a single family, that it could never be considered a multifamily house.

They said that I could apply for what is called an "accessory apartment" rental permit, which would allow me to rent the property after jumping through a bunch of hoops and inspections w/the town. The only issue is that they said that in order to be approved for an "accessory apartment" rental permit, that the property would need to be owner-occupied, and that the town would check to make sure that is the case.

Since my plan is to build a decent multifamily real estate portfolio over the next few years, and this home is not one that I plan on staying or building a family in, I can't see how I can satisfy the town's requirement of being owner-occupied for all of the time that I plan on renting out these units.

Again, I'm trying to do everything by the book here, and it seems like the town is forcing my hand to have an "illegal apartment" anyway.

Is there anything I can do here?

I appreciate the help!