Turning a bedroom into a separate studio unit

[Ryan Duphorn]

I have a 5 bedroom / 2 bathroom single family brick rancher. It was originally a 4bd 1 ba home (1 room being an office room but classifies as a bedroom) but the original owner added an addition off the back of the house. The addition includes a large bedroom, bathroom, and walk in closet. This addition just includes double doors that lead to the original house. What are your thoughts on blocking off the double doors and using it as a separate, private unit. The addition has its own driveway that leads to the back of the house. The addition has egress windows also. I would need to add plumbing for the kitchenette sink and electrical for appliances but I'm not sure if my breaker has enough room for another 240v for the stove. Currently as a 5 bd 2 ba it rents for $2500 but I'm finding it hard to increase rent just due to the fact that there's not many people out there looking for a 5/2 to rent or else they would just buy. My current tenant now only occupies 4 of the bedrooms.

Numbers

Current rent - $2500

If I split into 2 units, unit 1 (4 bd 1 ba) would rent for $1800-1900 and unit 2 (studio 1 bd 1 ba) would rent for $1100-1200. This studio transformation would bring me about an extra $500-600. I'm not sure the cost for the kitchenette install with rough in work but I have great relationships with my subs and historically keep my reno costs down. 

[Andy Sabisch]

First I would make sure that you can do what you want based on the zoning for the property as many areas see MF properties differently than SFHs.  

Second, as you mentioned, I would see if the utilities support the conversion.  Will you split the water line and add a second meter?  If not you will have to cover the cost for both (unless you have a well).  The same with the electric.  If you are not installing a second service / meter, you will be carrying that cost as well.  If people are getting free electricity and water, they tend to be a little less frugal :) .

Then check on insurance costs for a MFH and add that to your projections.

Finally, talk to your contractors and see what requires permits, what their experience has been in getting them to pass inspections, the timeline and the cost.

Factor all of these into the decision to move forward or leave as is - maybe advertise it as a 4/1 with a home office with outside access and get more rent that way.

One last point - I hope that the addition you mentioned was done with permits and is reflected on the tax rolls because if not, you may open a can of worms you wish you had not.

[Ryan Duphorn]

Quote from @Andy Sabisch:
First I would make sure that you can do what you want based on the zoning for the property as many areas see MF properties differently than SFHs.  

Second, as you mentioned, I would see if the utilities support the conversion.  Will you split the water line and add a second meter?  If not you will have to cover the cost for both (unless you have a well).  The same with the electric.  If you are not installing a second service / meter, you will be carrying that cost as well.  If people are getting free electricity and water, they tend to be a little less frugal :) .

Then check on insurance costs for a MFH and add that to your projections.

Finally, talk to your contractors and see what requires permits, what their experience has been in getting them to pass inspections, the timeline and the cost.

Factor all of these into the decision to move forward or leave as is - maybe advertise it as a 4/1 with a home office with outside access and get more rent that way.

One last point - I hope that the addition you mentioned was done with permits and is reflected on the tax rolls because if not, you may open a can of worms you wish you had not.

 This is super helpful thank you. The addition was permitted when originally done.

[John Litz]

It's all about the zoning. Many cities have not gotten up to speed with conditional use permits or zone changes. Most still are not doing ADU's either. You will need to go speaker to the planners office and see if your project is even feasible with the current zoning. Don't waste time or money until you figure out this step.

[Jacob Sherman]

would have to confirm with zoning to see if it would allow for a rental license