Long term upstairs/short&medium term downstairs

[Trace Adams]

Hi all!

I am looking at investing in an out-of-state property that is a 5 BR, 3 BA which is a 3/2 upstairs and 2/1 in the finished basement. There is also a full kitchen and laundry in the basement. There is not a separate entrance to the basement, but the stairs to the basement are in a laundry room in the back part of the house. My thought is if I bought the property I could rent the upstairs and downstairs separately, perhaps the upstairs as a LTR and the basement as a STR/MTR hybrid, or STR/MTR hybrid both upstairs and downstairs. Curious of a few things for those that execute this strategy currently:

-The city the property is in has a no more than 4 unrelated people rule, would that be an issue for me if all bedrooms were full or does the fact the basement tenants would be short or medium term save me?

-How do you manage thermostat and temp difference between up/down stairs (assume basement will be a lot cooler)? 

-How do you manage utilities since everything will be shared?

-How do you manage the general vibe between up and down stairs tenants? I.e. what if one doesn't get along with the other

-Any benefits to trying to officially convert it to a duplex with the city if it is zoned to allow MF? If not, any legal considerations for running a SFH as a duplex?

[Bradley Buxton]

@Trace Adams

The value add sounds like a good opportunity. Check your local zoning codes you might not be able to get permits for a multifamily if it's zoned single family. Here in Reno, NV there are multifamily lots zoned for multiple units and you can build only if the lot is large enough. It's very tough to get the city to convert the zoning from single family to multifamily.  Also check with the assessor's office if those extra basement areas are permitted. The owner might say they are and adding extra square footage to bump the price. If the assessor doesn't count the sqft then that fact will come out during the escrow process and could sink the deal.