Webster’s defines a duplex as “a house divided into two apartments, with a separate entrance for each”. That being the case, why not be able to convert those two apartments back into a single house? It’s an issue that many duplex owners think about.
Two options are always better than one
Why would you want to do it? Clearly, the market can dictate which form of housing is more desirable at any certain time. In some single-family neighborhoods you can see owners who have converted these dwellings decades ago into duplexes – typically because the rental market was not as strong at the higher price-point so they decided to subdivide and roughly half the amount of rent. But as a neighborhood goes up in the value, the correlate may be of interest. The bottom line is that simply having the option gives you the better position on final exit.
Other sectors of real estate do the same thing
Those multi-story self-storage facilities you see are actually built to be morphed into office and industrial use. And self-storage is not the first real estate sector to see the genius behind building properties that can be altered with minimal cost to meet another – and more profitable – use. Even billboards are built to have either two ads side-by-side or one large one. It’s just smart planning.
What you need to have in place
For a duplex to be changed into a single-family dwelling, the following would have to be in position:
- The legal right to do so. While most cities will allow you to move “up” the zoning ladder from multi-family to single-family without additional zoning changes, you definitely need to make sure that you have 100% approval to do the conversion before you begin work.
- The structural ability to do so. To convert a duplex into a single-family home you will have to remove some interior walls to connect the spaces and open things up. Make sure that the walls you need to remove are not load bearing and that the cost of doing so will not break the bank.
- The aesthetic ability to do so. Some duplexes began life as single-family homes and it’s easy to see the path to re-connecting the two with one common front door. In other cases, there’s no clear path forward. Hire an architect to help you create a master plan for the new conversion.
- The market demand to do so. If you’re going to convert back to a single-family dwelling, it’s a one-time shot. You would look like an idiot if, after all that work and money, you had to separate things into a duplex again. If you’re getting $900 per side for the duplex, can you really get greater than $1,800 (both sides combined) as a single-family? Or is the demand such that a single-family buyer will pay more as a residence than an income property? Better not mess this up.
Conclusion
Having the ability to convert a duplex into a single-family home is a great option and fuels a much greater feeling of security in your investment. But make sure that your property has everything in order if you want this additional liquidity option.