Florida has experienced a low inventory of homes for sale for a while. And the extended COVID-19 lockdowns on other States, coupled with the Sunshine State’s non-existent State taxes, have created an influx of new residents that have done nothing to alleviate the situation. As a result, property prices in the Orlando area have skyrocketed to unbelievable heights during the past year. It’s not unusual to find a property selling for $250,000 today, which sold for only $150,000 two years ago. This situation makes it extremely hard for a landlord to increase her properties without dishing out some extravagant sums of cash.
A possible solution to the dilemma is to convert your single-home properties to duplexes. A conversion might not be feasible for all scenarios, but it could very well be the one you are looking for, given the right circumstances.
What is a duplex?
Technical definitions may vary slightly from one document to another, but in general, a duplex is a building designed for two separate families. It has independent kitchens and bathrooms and at least a common wall.
Benefits of converting a single-family home to a duplex
No need to buy a new property
The beauty of converting a single-family home to a duplex is that you already own the land. Also, you don’t have to negotiate a new mortgage with a lender, and you won’t have to take a hit on your credit score.
Higher rental income
As with everything else, the final numbers depend on many variables (location, market, etc.), but on average, a landlord can expect a higher total income. For example, while a three-bedroom two-bathroom home might generate a $1,850 monthly rent, a two-bedroom one-bathroom home ($1,350) and a single-bedroom one-bathroom home ($950) could produce a total income of $2,300.
Lesser vacancy risk
By having two properties, instead of a single one, the odds of not finding tenants for both of them, at the same time, decrease considerably.
Higher property value
Another benefit of converting your home into a duplex is the increased appraisal value. But, of course, you’ll have to do your homework and figure out if the combined construction expense and additional income are worth the increase in property value.
Easier mortgage payments
Assuming you had cash on hand and didn’t incur additional debt by remodeling, the extra monthly rent will ease the original property mortgage burden. And remember, you could also live in one of the dwellings while renting the other.
How to do it?
Before you rush into a home improvement store and start buying supplies, there are a few steps you must go through. Take into account that the following is only a small list to get you started. Since this is a significant financial commitment, you must consider all your options before taking action.
Zoning
The first step is to check the zoning of your property. In most cases, your property’s zoning should be at least an R-2. If you don’t know the zoning of your property, visit your County’s online page Zoning Division.
Remodeling estimates
Once you decide what kind of improvements are required, contact several contractors and get estimates. Even if you plan to do some of the upgrades yourself, this is an important step. It’ll help you plan your work, and it’ll show you things you might have omitted.
Financing
Do you have the cash needed, or will you need a loan? Maybe you could even refinance the property and take advantage of current low-interest rates.
Taxes
Your property taxes will most likely increase due to the increased value of the property. Even though the additional rental income will more than offset the taxes, it’s good to be aware of any expense you might incur.
Rental prices and Property Management
Once you gather all the previous information, talk to a reputable Property Manager or Property Management company in your area. They’ll be able to give a rental assessment of your property based on your plans. This step will help you decide if the expenses and time needed to convert the property are worth the extra money. Also, if the new duplex is your first rental property, or you don’t want the extra work of managing it, you might be better off hiring the services of an experienced Property Manager.
Transforming a single-family home to a duplex could get you some extra passive income every month. At the same time, it might help ease the current housing crisis while providing a family a good place to live. Good planning on your part will help you make a sound financial investment of which you could be proud for years to come.
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At Don Asher Management, we've proudly served the Central Florida community for over 70 years. As a locally-owned company with a strong understanding of the local market, we've cultivated substantial relationships with local and national contractors to provide top-quality services. We're dedicated to meeting your Property and HOA management needs with a personalized touch, combining our decades of experience and commitment to detail for unmatched service. We're confident in our ability to deliver exceptional services tailored just for you. Choose Don Asher Management - where personalized attention meets professional service.