Originally posted by @Frank Chin:
I am in NYC and this is very common.
I owned triplexes and many duplexes with an added unpermitted apartment. I've bought them that way and sold them that way. One legal triplex I had was converted and in 1941, WWII when there's a shortage of housing.
I did buy a duplex at a foreclosure auction, 2 apartments and a unpermitted basement one. I thought nothing of it. But 2 neighbors got into a dispute down the block, building inspectors called, checked that house and while they're at it, those down the block. I was dumb enough to have 3 mailboxes, they rang the doorbell and found the violation.
Now, the easiest thing is to get the duplex approved for a triplex, right? Not here. There's a local board that has to approve it first. Notices had to be sent to all neighbors within 200 feet, and a public hearing held. There's a home owners association that opposes all zoning changes and usually get their way.
Duplexes here has different standards than 3 families. I have to install fire escapes and enclose the furnace room with cement walls. Nowadays, fire alarms, outside Siamese fire hydrants are required, so even if the zoning board allowed it, you have to do all the above alterations. If I have to go through all of this, might as well buy a real triplex.
I spoke to the local home owner association president and he tells me triplex conversion, with fire escapes, bar in front windows would ruin the suburban feel of the area besides bringing in more traffic, overcrowding the schools and crime.
Imagine all the problems an added basement apartment creates.
The neighbor down the street who started the bruhaha, who was cited, combined the 2BR/1ba unit with the 1BR/1ba illegal unit, had a really large beautiful apartment. He built a staircase between the two. So instead of spending on dumb fire escapes, fire proof furnace rooms that no one sees, he added value on a large unit, that someone can rent, and with a separate living space in the basement, house hack with a roommate. No zoning approvals needed because the property remained a duplex.
The funny thing is the building department cited me for the illegal unit, I had it fixed, and the case is closed but cost me $6,000 in expeditor fees and expenses but the finance department still has me down as a 3 family, so I pay a little more in property taxes. I decided not to touch it given what I went through with the buildings department. I'm retired, the house is mortgage free, the rent covers the taxes and utilities, and then some. So what more do I want?
Zoning practices and regulations vary by area. But I think what my neighbor did, combining the two units, is a clever way, if you decide to go through with it.
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Thanks for the insight given. I wouldn't had bought my property if it was marketed as a duplex due to the numbers not making sense. Unfortunately, my case was misrepresentation or fraud. If I were to buy a duplex and convert it to a triplex illegally just to make extra money, then the fault is on me. Some biggerpockets members/potential buyers were properly disclosed about the property being a duplex by the seller, as well as his agent and despite that, the seller is obtaining revenue as a triplex then I can see how the buyer agreed on it knowing it is legally permitted to operate as a duplex, but the current income stream and subsequent slight price hike is to account for the illegally operated triplex. That is proper disclosure.
After reading your post, I will take your advice and just expand upon the 2nd unit and make it larger. I would probably leave it as a duplex and expand the second unit once the tenant vacates. I would still present the issue to the seller agent of misrepresentation and how they will make it right. The seller just probably didn't know, but a professional realtor agent should be held to a higher standard. It is one thing not to know about some illegal hidden work behind the drywall, but the necessary occupancy permits for a Pittsburgh property are within the realm of standards of care for a realtor that passed an exam and is considered a licensed professional.
