We purchased a property in Chicago at auction that is one of the standard Chicago greystone multi unit structures. However, this was illegally converted to a single family residence I believe sometime back in the 90s or early 2000s. When we closed, I received the zoning info showing that it was still zoned for multi-unit. I checked the permits on the building and have not seen any pertinent to the conversion, so I am assuming it was not done legally or potentially up to code and certainly not with proper zoning approval. The assessor office still taxes it like a 2 unit property.
We were thinking of going FHA 203k to finance the construction, but we will have to pull permits for the loan. So here is what I'm thinking could happen:
- FHA makes us get an architect or engineer to confirm the single family plans making sure the structure is sound and has been converted safely. To me, engaging these professionals seems costly. To keep it as a SFR, we would save on a 2-story porch ($18k) as well as another kitchen ($12k) and a few other needs for multi unit.
- We could keep it as a 2 unit, but then we have to create a new wall to separate the units again, adjust the main staircase, do the 2 story porch along with a 2nd flr HVAC, dual water heaters & electrical, kitchen and maybe move and/or add a wall. Possibility is that we get a repair and replace permit, but I would need to find someone who knows the original layout as a multi-unit and put it back as it was (not sure if this is an architect, engineer, etc.)
- We keep it as a SFR and use cash for reno but will there be issues when we sell an illegally converted home?
The higher cost rehab is ok bc we will live here for a while. My goal is to have a nice place to life for a while that we will fix up and maybe sell for a profit 5 in a few years due to equity created in rehab. It's like a slower flip, I guess.
Any thoughts?
