Help! Add a unit to my duplex?

Question

Hey Everyone!I have been posting a bit too much but I need some help! I just bought a duplex with an unfinished basement and am thinking about adding a unit in the basement (if zoning permits me to). I cant imagine it would ever make much more than $400 in my neighborhood, but it would dramatically increase the value of the property. I would need to put egress windows in, bathroom, and a basic kitchen. It would be a studio. Otherwise I could rent out the space as storage with no value add. Thoughts? I would love to talk to someone in minneapolis who has done this.

Nick Jude · Answer

are you talking add a unit meaning make it a triplex or just add a bedroom? It's unlikely zoning would allow you to convert it to a triplex (you'd have to look into that). I will bet they'll come back with you can add an accessory dwelling unit which in my opinion isn't worth it. Why not just add another bedroom to one of the existing duplex units? Add increased rent and value to the property without the full headache of adding another kitchen. Adding bedrooms to duplexes is my game plan everytime

Christopher Phillips · Answer

This might help: Minneapolis requirements for basement dwellings...http://www.minneapolismn.gov/www/groups/public/@regservices/documents/webcontent/convert_267078.pdf

Tim Swierczek · Answer

@Rex King It will help with Zoning but all of the construction cost concerns remain and with the increased construction costs the ROI on these units has been hit or miss.

Eric Sanford · Answer

I realize I'm resurrecting this thread, but for a relevant reason- how will Minneapolis' new zoning implemented in 2020 affect this question? https://minneapolis2040.com/

Rex King · Answer

I have a couple bullet points around this subject. First to echo what most people are saying I can tell you the city of MPLS is not going to allow you to add a unit. They do not get anything out of adding a unit. Property value does not go up enough to make them gain tax wise. Which is a complete hypocrisy because all city officials complain about not having enough affordable housing. In MPLS you would have to go through a ton of hoops and hurdles to get rezoned for a triplex.On another note people are saying it is not worth $400 a month to get that project done. It may be unlikely to get it finished for under $40,000 but if you could it is a good investment. Especially in a market like ours where a lot of MLS properties do not make sense. If you can get that $400 and be in for less than $40,000 to do the project that is better than a 10% return on your cash. Hard to find in any other market. If you were in a great rental area that will always have demand for that I would do that investment. In fact we just did it on a single family home that is zoned multifamily. We are able to add $720 sq ft for $80,000 and we will be able to get $850/mo in rent. Taxes will not go up much, city assessments will not change, heat and electric paid by tenant. We add an additional garbage can, additional water usage but these numbers work.

Todd Fox · Answer

If you can only get $400 a month I promise you it is not worth your time and energy. You're going to spend a lot of money renovating the basement. Each window well is going to cost about $2000. You will have to structurally reinforced those openings. Plus you will have to frame out the basement, add insulation, run all new electrical, add all new plumbing, plus drywall paint flooring etc. But more importantly if the house is older I can pretty much guarantee the basement will have moisture issues. You could spend all of that money renovating it only to find out in the spring time that you have a mold issue and you will end up having to rip everything out. I also know that in my city once you have three or more units you are required to sprinkler the entire building. That cost alone is astronomical.

Christopher Phillips · Answer

Did a quick search for basement apartments in Minneapolis. Came up with a few. $450 for unfurnished. Shared bathroom. But I found one for $800 for a 750sqft basement apartment 3/4 bathroom. natural light. Shared kitchen and shared backyard.So, price seems to depend on how much of it is really a separate apartment vs. a room with shared access.

Shane Hedeen · Answer

Totally agree with @Nick Jude in that you're likely to run into far less headache here if you can somehow add to one of the current units and increase rent in that unit. Likely more cost effective if your projected rent is $400 per month. Depending on numbers of what that duplex already looks like, it may even be better to leave the basement and save for another property. Trust the numbers after you look into zoning and weigh all the options. You are totally doing the right thing though in posting here, looking into different opinions and ideas. At the end of the day, you're the only one of us with a key to the place, and just have to trust the math and logic.

Marcia Maynard · Answer

Self-storage places can sometimes get as much per square foot as an apartment in our town. I don't know about your market, but I would make the basement into a nice storage area. Either rent it out (for extra income) to one of the tenants in the duplex, or use it yourself. You'd be surprised how much you will need extra storage once you become a landlord!

Travis Sperr · Answer

@Matthew Lindquist - Zoning is the first place to start, if it can be done it will be about cost. My best guess is that to finish the space to current code with egress, electrical, plumbing, separate entrance, etc. will not prove to be the best use of your money with only $400 a month in additional income.