Had settlement today; got an interesting idea... - Posted by David

Posted by JD on March 03, 2000 at 23:57:23:

Could there be some kind of catch. Possibly they require the new merged unit to be brought up to code. I would think this would be wildly popular otherwise. Which Fed agency donates the money? I am in the process of converting a 4 unit to a 3 unit, I will have to research this.

Had settlement today; got an interesting idea… - Posted by David

Posted by David on March 03, 2000 at 17:36:32:

Sold today a 2 story victorian house over 100 years old and about 1850 sq.ft. It had been divided into more or less 2 units quite a long time ago probably at least 30-40 years ago. Various owners have upgraded the 2 unit situation, as there was separeate electricity, water and sewer service; but only one furnace.

First, new idea was that the last owner had rented the first floor as a 2 bedroom apartment for $425, and rented the second floor as 3 sleeping rooms with shared bath and kitchen, among themselves, not with the first floor. Rent $200 a room, for total of $1,025. Presumably the second floor would rent for the same as the first if as one apartment. So the last owner increased the rent by essentially further subdividing the 2nd floor into 3 sleeping room units.

Secondly, the buyer are going to make it back into 1 single unit first and second floor together. They’re going to live there in the whole house. I hadn’t thought of that use but its a great one.

Multi-unit prices are down since the tax law changes in 1986, such that if this was one unit it would have sold for 10 to 20% more than it did as a two unit. There are always more buyers for SFH than 2 units probably 10 to 20 times the buyer pool. More buyers equals more demand and higher prices. There has to be plenty more of properties that formerly were SFH, converted to 2 or 3 units that can be re-converted back to SFH. Great idea these buyers came up with, I can’t take credit, but I’ll keep it in mind for another day, another deal.


Re: Had settlement today; got an interesting idea… - Posted by Jim IL

Posted by Jim IL on March 03, 2000 at 20:08:51:

Here is an idea for you to expound on.
In my area there is a city program for reducing density.
If you buy a converted SFH (one that was divided into a multi unit), and then agree to convert it back to SFH, the city gives grants and interest free loans.
In my city it is $21k per unit removed.
So, if I bought a 2 unit and made it one, the city gived me $21k, at closing.
All I have to do is draw up plans and show them a signed purchase agreement.

I am now looking for a four unit that I can convert back, that is priced low, thereby using the city funds to close the deal. (well, most of it anyway.)
I can handle the conversion with my credit line if I have to.
Then I’ll sell it as a SFH, and take the profit elsewhere.

Check your area, there may be such a program there.
The funds here are from the Federal Govt., and the city simply allocates them in certain areas of the city.

Just my $.02,
Jim IL

Jim, As always an excellent post!. - Posted by David

Posted by David on March 04, 2000 at 08:57:30:

I had not heard of such a program, you would think that its a HUD program. I will check it out here and if they’re not using it I’ll suggest that the “get with the program.” Thanks again Jim.