Convert A 4 Unit?
What would go into converting a 4 Unit to 6+ unit.
The building has 2 floors; 2 units on each floor and a full unfinished basement. Can the basement be finished and converted to 2 more units; of course there will be the rehab cost.
Basement occupancy is tricky. here, its either an openable window with threshold minimun 48 in. from floor and equal to 8% of floor area, or a door leading directly to ground level. If you choose a door, you still need an openable winow equal to 4% of floor area designated for ventilation and natural light. Then you got to either bust up the concrete floor for plumbing or tap into an available soil stack (if your lucky). Personally, i DIY everything, and still woulnt convert in our PA market..
sorry, should have said maximum 48 in. not minimum....
im a project coordinator for many investors across the country
i can tell you its not that hard to transform a basement.
just certain giudlines. first thing get a city inspector to tell you exactly what he recomends. keep his name and# and only deal with him from then on. you will be suprised what you can get away with this way. make sure he does the final inspect also. be your own general on the project save 30% ill walk you through it if you like.
The big thing that caught my eye was the low maintence cost. $3000 for a 19 units. That seems extremely low to me. Also taxes will need adjusting for the fact they will increase based off of the new sales price. You should always allow 5-10% for vacancy as well. Is the mortgage assumable? What would your debt service be? Over all though it seems to be a decent property, from the limited info given.
I would like to see a complete break down of the operating statement. The expenses need to be examined. The maintenance figure is low and there is nothing for management or reserves. What is the purchase price? What is the occupancy? What shape is the property in? Is the seller willing to participate in the funding (seller second)?
Does the buyer have the funds to close and have experience in management?
Just the begging questions to evaluate a deal!!!!
Good Luck,
Robert
[addsig]
Finding financing for this would be tough. Permits would be a nightmare as well, going through that right now. Tenants will move, leaving you with less cash flow. You would need to add the carrying cost, permit, construction, and probably refinancing costs, to name a few. It is a highly specialized area that can be done, but I would wait until you have a couple years of commercial real estate investing under your belt before taking on a project of this nature.
What are your estimates of costs, cash flows. etc....
If the homes are on septic tanks then you probably will not be able to add any more. I would check with the health dept and what is acceptable for septics in your county.
Good Luck,
Robert
[addsig]
Make your purchase of the property contingent on a satisfactory (to you) development analysis. You may find the land price with the 2 homes is a bargain compared with the cost of installing utilities. If it is septic tanks only a significant portion of the land that can handle septic systems will have to remain undeveloped if all sewage is pumped to 1 septic system (rentals), or each home will have to be on land that can handle a septic tank (sell). Make sure you know the ability of the land and the total cost before you commit to buy.