House hacking... thoughts on turning SFH into a duplex ?

[Kari Herman]

Hey all. We just closed on our first investment property. My husband and I plan to live there as we rehab the place. The single family home naturally lends itself to creating it into a duplex. Finished product being two/ two bedroom one bath units in downtown Colorado Springs growing market.

Any thoughts on rehabbing to create duplex vs keeping it a 5 bedroom SFH. Any advice on this journey as we go forward?!

[Matt Walker]

Zoning is correct first. Then if it's OK to convert, look at your numbers. What is your CAP rate as an SFR vs a DUP? Take your expected net rents of each (gross rent/mo minus est. 30% for tax,ins,mgmt,maint & vac) unless you will manage it yourself then leave that 10% in. Multilpy that by 12 months for annual net retns and then divide by your 'all in' dollar amount for each 1) leaving costs of as is SFR or 2) cost to buy & convert to DUP. Which is higher? That gives you the best way to analyze the deal. If you're still not sure, I'd be happy to walk you through the numbers any time.