SFR conversion to Duplex in Michigan

[Taevin Thomas]

Hey guys, I'm a new homebuyer/ investor in Ypsilanti, MI.  I want to begin house hacking by purchasing a duplex close to my full time job, live in one side and rent out the other side to a tenant.  It's been tough trying to find affordable multifamily homes in the area though, and this fact has brought me to another idea: 

Buying a single family residence with an FHA loan and then converting the unit into a duplex as a part of the renovation. Do you guys have any experience with this? I know that there's zoning to consider as well as code and plumbing. All things considered, generally speaking would this approach be much more expensive than finding a traditional duplex in the area or less? Please let me know anything and everything that you can.

Thanks, 

Taevin

[Matt Hurley]

I house hack a single family house in Ypsilanti, and long story short: yes you can convert some houses into a duplex, but it really comes down to finding the right opportunity. The house has to be basically setup already for it to work, and each unit needs a full bath and a kitchen, and it's own hvac system. It can get really expensive. I've seen a few larger single family houses that have a door blocking the staircase up, then they added an external staircase to the house turning it into an upstairs/downstairs duplex. Most were modified like this decades ago, I haven't seen a lot of people retrofitting SFH's recently.

More importantly, you have to know your zoning inside and out. For example, you can't do any duplex conversions on R1-R5, nor can you even convert it into a rooming house is you wanted to. Spend some time reading the town zoning definitions, and call the zoning board to ask questions. Since the City of Ypsi has EMU, code is followed to the T and it's mega rare to pass your rental inspection on the first try. 

If you're creative, you'll find an opportunity though! The tenants in my house hack currently pay for my entire PITI + the water, and when I move out the place will throw off something like a 30%-40% cash on cash return.