Converting a single-family home into a duplex is a great way to increase the return on a real estate investment. A homeowner can cover a substantial portion of their mortgage payments by turning 50 percent of their home into rental property. That said, there are a few costs to consider before they can begin earning. Here are some of the major expenses:
- Compliance with Local Building Codes
The homeowner’s local building department will have requirements that must be met before they can bring a tenant into the second residence. Common requirements include ensuring that the second apartment has an entry door. In some places, it will be necessary to provide two entry doors. The second apartment will also need its own meters for electricity, water, and gas. Other essentials include at least one bedroom, one bathroom, and a kitchen or kitchenette.
- Dividing the Space
Once the homeowner understands the codes, they will need to figure out how to separate the apartments. The two best ways to do are to either build a wall down the middle to divide the space or construct living spaces on different floors. The first method usually requires much less work, which means that it will usually be the more affordable project of the two. If the homeowner opts for apartments on different floors, they can expect higher expenses and a more complex remodel project. For example, a basement apartment requires access from the first floor, which will often require major construction. The homeowner will need to hire experienced builders and tradesmen to handle tasks like replacing the pipes.
- Decreased Home Value
In some cases, a single-family home will lose value once it is converted into a duplex. The loss of value can happen for several reasons. For example, the homeowner’s bank might see one resident as a better risk than two.
Converting a single-family home into a two-family home can certainly help a homeowner to pay off their loan faster; however, it is important that they go into it understanding the risks. They should think carefully about the costs above to understand what they have to gain and to lose.