Providence Rhode Island duplex conversion to triplex

[Sean Doherty]

I found an up/down duplex in Providence Rhode Island that is less than a decade old and as far as I can tell in great shape. I did an analysis using the BP rental calculator and determined it only makes sense to buy if I can convert the basement into a third unit, this will obviously add rental income and I believe it will add value to the property. I toured the property and think the physical aspects of doing this are possible.  There is a regular walkout door on one side of the unit, a staircase that leads up to the main entry/exit point on the other end of the unit, high enough ceilings, and plenty of standard windows along one side of the basement.  My plan was to use a 203k loan to buy the property and fund the rehab cost of adding the basement unit.

I'm interested to know if anyone has created value by adding a unit to a property in Providence and if so, what was the experience like? I went to the city hall and found out it is zoned R3 which I guess is the first step towards making it possible to convert to a 3 family. The next step is where I get a little lost. I was given an application for variance/or special use permit that I will be reviewing shortly and also told I would have to hold a meeting to see if anyone in the neighborhood objects to my conversion plan. I was also told that 3 family homes require sprinkler systems to be installed in the entire building.

So my next step is to review the application for variance permit and determine the extra cost of installing a sprinkler system. If anyone has any experience in doing something like this can you give me some feedback on whether or not its worth it or think its even reasonably possible. 

This would be my first deal. I'm excited to start investing and want to do something that adds value to a property but I am a little nervous about the legality/possibility of doing this as well as the extra costs from applications and fees that I might not be aware of, and the sprinkler system installation cost.

[David Sisson]

BTW-neighborhood is critical here. Much of the city is cheap $1200ish a month for a 2br, then some areas get up to $1600—$2500 for a nice 2br unit. $1200 doesn’t really fund any decent rehab or addition.