First Time Real-estate investment, Durham NH, Single Family w ADU

[Nicholas Chagnon]

Hey BP community. I am 26 and about to close on my first investment property. It is a 3bd 1ba single family with a 1bd 1ba ADU (seperate kitchen,bath, living room, and bedroom) in seacoast area of NH.

I think I can get 1200 for the 1 bedroom and 2200 for the 3 bedroom. Do you agree, should I ask for more? The home is on a private road, 5 min from UNH, very good curb appeal, nice yard and has nice contractor grade quality appliances, windows, and flooring. I think people would call this B-property?

I plan to owner occupy the home for at least a year and would like to move to another investment property when I can save enough. I have and engineering job that is fueling my savings, owner occupying this investment should help my savings rate. Would you live in the 1bd or 3 bd? Rent or AirBnb the other?

[James S.]

I would strongly suggest you familiarize yourself with Durham's zoning laws in detail before executing your current plan. Specifically, this section:

"4. In zoning districts where no more than three unrelated persons may occupy a dwelling unit (as specified in subsection 175-56 General Dimensional Standards), there shall be no more than three unrelated occupants in total for the single-family dwelling and the accessory dwelling unit combined or for the single-family dwelling and the accessory apartment combined."

This include these zoning districts:

1. Rural (R)
2. Residence A (RA)
3. Residence B (RB)
4. Residence C (RC)
5. Central Business District (CB)
6. Professional Office (PO)
7. Church Hill (CH)
8. Courthouse (C) and
9. Coe’s Corner (CC)

It is highly likely that your ADU Home falls within zones 1-4. This would make your current plan illegal under Durham zoning laws. Anyone who has any experience in owning or managing rentals in Durham can tell you that the town does NOT screw around with this stuff. The town and citizens of Durham are determined to continue to bite the hand that feeds them, but at the end of the day, you have to work within their regulations. They can, and they absolutely do, fine/lein/prosecute/whatever, people attempting to circumvent student housing rules.

Furthermore, Airbnbs and the like are not currently allowed in these zones without an exception from the ZBA (good luck with that):

Section 175-53. Table of Uses
Residential Zones:
Rural (R) Special exception
Residence A (RA) Special exception
Residence B (RB) Special exception
Residence C (RC) Special exception.

I don't want to see anyone's investment go up in smoke because of these zoning restrictions. If I had to guess, you're buying the home on Poindexter Rd in Durham, as it matches your description, which is why I wrote what I said. What the prior owner says about rentals should be disregarded going forward. Have an exit strategy that does not involve renting if you are in Durham and are in one of those zones restricting unrelated housing. 

That said, if you are within 5 minutes of UNH but not within Durham, forget everything I said.