Dallas-Fort Worth House Hacking Help! Zoning/Planning?

[Michael Menchaca]

My main issue is city zoning/planning. I'm primarily looking at Fort Worth and Arlington and the smaller cities in between and around. I have found a couple of really nice properties with ADUs or buildings on the properties that are convertible to ADUs here in the Dallas-Fort Worth area. The main issue I'm having apparently is compliance with city ZONING AND PLANNING. Today, I found a very reasonably-priced SFR with a guest house in Hurst, TX. Per the advice of my RE agent, I called the city to ask about whether I can do the "House Hack" -- acquire the house with a low down, owner-occupied loan, live in the guest house, and rent out the main house. It literally took half a day calling numerous times to get a hold of someone who actually worked in the Planning and Zoning department but when they finally answered, they said yes it should be possible! So I'm super excited. It's my first viable deal since I started looking three months ago. I start moving forward with plans, notify my lender of intent to offer above asking price, pull the comps, run the numbers with multiple scenarios and everything looks beautiful! I call my RE agent to set up the showing and as soon as I hang up, I get an email... It's Hurst Planning and Zoning... The email reads as follows:

I want to clarify. If you purchase the home, your family may live in the front house. You may not use the main home as a rental property. That is considered multi-family and that is not allowed in a single-family residential area.

https://library.municode.com/tx/hurst/codes/code_of_ordinances

Here is the link to our code of ordinances. Look-up R-1 and it defines a single family zoning district. If you look under Definitions - “Family” is defined as no more than 4 unrelated persons living as a single housing unit. Both structures on this lot are considered one unit since they are on the same water and electric meters. The main reason we require the same meter is to avoid single-family properties to be used as multi-family property.

Needless to say, I am feeling pretty discouraged. The books don't say ANYTHING about zoning requirements so I was caught off guard... Do you know any loopholes to these types of rules or am I crazy for even trying to do this strategy? My argument is that I can rent out the house without me living there. What makes it so different if I'm there and I'm on the loan? Sure, to the city it makes it seem "multi-family" but technically It should be no different than having roommates or renting-by-room, right? There just happens to be another livable area on the property. Taking the plan further out, after a year, I intend to have saved enough money to do another House Hack which would allow me to move out and rent the ADU separately, making the property an actual positive cash flowing asset... However, after the issues I've been having, this plan and all the work I've put into it may just be all for naught... Anyway, I'm already in the process of getting attorney opinions tomorrow morning. Have you had issues similar to this? Any advice would be great!

PS - I'm aware there are multiple sub-strategies to House Hacking. My girlfriend and I prefer the "Luxury House Hack" which is using an ADU on a property. If plans were to change, should I also be worried about zoning restrictions in DFW for using the trailer/RV method or rent-by-room?

[Bruce Lynn]

You are correct.  Most cities around here, do not like and will not approve you turning a single family into a multifamily unless the zoning is there already.  They don't approve garage conversions.   My friend who was a building inspector said they don't like it, because the water systems, roads, parking, and sewers were designed for single family.   Turn a single family neighborhood to multi family and it changes the neighborhood design and taxes the city provided services.

Some cities don't allow AirBnB or perhaps only in certain designated areas....like Arlington...specific area designated near the stadium.

You can read some of the Hurst law here.

http://www.hursttx.gov/Home/ShowDocument?id=313

At least they allow you to rent bedrooms, so you might try buying a 4 bedroom home and rent 2-3 of the bedrooms if you can get no more than 4 unrelated people.   I'm sure some people get away with more as it is tough to enforce, but when the neighbors complain, then you have an issue.  Especially if you have signed leases with tenants.   

You can also try buying a 3-4 unit building and living in one and renting out the other units in a place that is already zoned for multifamily.

Other parts of the country are trying different things and allowing rezoning of single family to multi in some areas.  It helps increase tax values in some older neighborhoods where people don't really like the big lots and big houses that are now pretty old.  Also where there is a shortage of rentals or affordable housing some cities trying it.

You might try unincorporated areas of the county....outside of Tarrant, like Wise or Parker or perhaps South to Johnson.

Best wishes and good luck.