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Have you ever wanted to do more with your single-family investment properties? While single-family real estate is frequently considered a very safe and reliable investment, it is not uncommon to seek the benefits that multifamily real estate can offer.
While the easiest way to enjoy the advantages provided by multifamily investment properties is to simply buy multifamily real estate, sometimes you are not in a position to buy new properties, or there are not multifamily properties available at a reasonable price.
So, what is the solution? While there is no definitive correct answer, let me show you how to convert single-family to multifamily properties in order to increase the value of your investment properties.
Before anything, you need to know that in order to convert single-family to multifamily properties you are going to need a significant amount of money to get started. So, let us help you find the financing option that is best for you. All you need to do is click the link below to book a free strategy call with us today.
Why Would You Want to Convert Single-Family to Multifamily Properties?
While each investor will have their own reasons to convert single-family to multifamily properties, there are three primary reasons that tend to shine through most of the time.
On average, multifamily properties have a higher potential to produce cash flow. After all, even if you lower the rent for each unit than you would ask for renting the entire property as one unit, you can easily yield noticeably more cash flow from a single investment.
Create Additional Housing Opportunities
Creating additional units when you convert single-family to multifamily can also go a long way in terms of combatting the housing shortage that is currently impacting real estate markets all across Canada. Instead of taking the time to find, approve and construct new housing development opportunities, you can construct new units or separate portions of your property to create new units for people to live in.
Increase Property Values
Multifamily properties are frequently considered more valuable than single family properties. So, if you are looking for a method to raise the value of your investment properties, convert single-family to multifamily properties and you may see an increase in value.
Discover How To Analyze a Properties Cash Flow With This Step By Step Guide
Do Your Research First
Before you do anything, you need to make sure you do your research before you start converting a single-family property and introducing multiple units.
For starters, take a moment to assess the local zoning laws and regulations. These will tell you what types of properties are permitted to be constructed in certain areas.
This means that sometimes, you may find that a property is located in an area that is zoned specifically for single-family housing and you will not be allowed to legally introduce new units to the property. Alternatively, you may be able to convert single-family to multifamily in the form of a duplex but there may be a limit on units beyond that, meaning you cannot turn the property into a triplex or a fourplex.
You will also want to take a look at the local rental market and see what types of renters are interested in certain neighbourhoods. Sometimes a neighbourhood will be a great place for single-family rentals, but there is not the same demand for people to live on shared properties such as duplexes. This is primarily common in neighbourhoods where the majority of residents are homeowners. While people may openly choose to rent a house in these areas, multi-family living can sometimes lead to residents feeling isolated among their neighbours.
Make Sure the Property Can Support Multiple Units
Another key consideration that you will need to take the time to weigh is whether a property can support multiple rental units or if is simply not big enough.
Remember, for a multi family residence to be legal each unit requires access to their own separate entrance, comply with certain fire and building codes pertaining to separation, and will need access to key home amenities. Not every property is large enough to support this and as a result they cannot be converted into multifamily dwellings.
Sometimes, it may be possible to build an addition onto an existing property to add an additional unit, but this is not always the case. Local zoning laws, building codes and the size of the property will all play an important role in determining whether or not this is possible. There may also be the option of laneway housing or garden suites if your property and municipality support the option.
Converting a Property You Already Own
If you are to convert single-family to multifamily using a property you already own, this should be an easier process than converting a new purchase. Not only is it potentially possible to use the equity you have already built in the property to finance the renovations required to complete the conversion, but you should already have access to all of the important zoning information pertaining to the property (or you will have an easier time obtaining it.)
Converting a New Purchase
If you are buying a property with the intention to convert single-family to multifamily and increase the number of units, it is important that you are up front with your realtor about your plans. Doing this will your realtor be more likely to help you find a property that suits your goals and can legally be converted into a multifamily home. They may even be capable of finding you an existing multifamily property that does not require you to spend any money to convert single-family to multifamily properties.
Remember: Talk to Your Mortgage Lender First
Finally, it is important that you remember to discuss your plans with your mortgage agent and mortgage lender. Certain lenders and mortgage products are designed with single-family properties in mind and others are designed to suit multifamily investments. Meanwhile some are perfect to convert single-family to multifamily properties.
If you do not communicate your plans with your mortgage team, you may later find yourself in a rough spot with your lender if the mortgage product you were approved for is only applicable to single-family properties.
Fortunately for you, this stress can all be avoided with our team at LendCity. Our team works with a wide network of lenders who each specialize in different types of properties and real estate investments. That means that the mortgage product you are receiving will be the best available option for your plans, every step of the way.
To learn more give us a call at 519-960-0370 or visit us at LendCity.ca Alternatively, click the link below to book a free strategy call to discuss what you need to convert single-family to multifamily today.