BRRR options I am trying to decide

[Ryan McCarty]

I have slowly grown a real estate portfolio totaling 7 properties and 15 doors over the last 6 year. I am currently renovating a 4 unit property. With the goal of maxing out all 10 of my traditional 30 year fixed mortgages. The property is set up as a triplex in one building and a 2/1 detached garage apartment for the 4th unit.  The property is on a large parcel of land. I am trying to decide if I should convert the garage space into another unit. Here are the options I am debating on doing: 

1. Do not add a unit and rent out each garage (2 of them) individually for $150/ month. Total gross rents would be $5700/month no additional work would need to be done and I could get traditional financing. The ARV of the property would be in the $600k range. This would still qualify for traditional financing and I would not need to do any additional work with the county and I would pull the equity out of this property quicker.

2. Add a 5th to the lower space. The 5th unit would increase the gross rents to $6500/month and the ARV would be around $750k. The addition would cost me about $80k to convert the garage space into an additional unit. However because it is now 5 units I would not qualify for traditional 30 year fixed rate financing.

3. Do the same thing as above except I would subdivide the lot into a new "triplex" property and "duplex" property. Subdividing the lot would add an additional $20k in expense as I would need to tap city water/sewer to the new duplex (previously the detached garage apartment). The benefit of doing this is I could get 2 traditional 30 year fixed mortgages and the ARV of each property I estimate to be $380k for the duplex and $450k for the triplex. There would be many more hoops to jump through with zoning and permitting. It would take an additional few months to pull my equity out of the properties.

I feel like option 3 is the best but more work. I like the ability to add an additional unit as well as have 2 traditional 30 year fixed mortgages on the properties. I also like the fact if in the future I can sell each separately if I wish. What do you all think?