One Rental Duplex or Two Simplexes?
Have recently closed on a townhouse in cobble hill. I am considering the benefits and detriments of renting one duplex with roof+deck, vs. having two tenants in two floorthrough apartments. Because this is a desirable school district, I am thinking it’s be relatively easy to find a family in need of a large duplex and…
Have recently closed on a townhouse in cobble hill. I am considering the benefits and detriments of renting one duplex with roof+deck, vs. having two tenants in two floorthrough apartments. Because this is a desirable school district, I am thinking it’s be relatively easy to find a family in need of a large duplex and less bothersome for me to administrate one tenant over two. Then again I am assuming there is significant demand. Two apartments also splits my risk of sitting on an empty property. Your two cents?
We recently had to make just this decision (you can follow the results on the Reno Blogs — North Slope Reno — if you’re interested). Here are the result of our research — and by the way, we too are in the sought-after school district.
My architect advocated staying as a 2-family because it would be a less costly renovation: probably saving between $30,000 and $40,000. Changing the C of O is more expensive, more niggling in terms of meeting code requirements, and of course you need an extra kitchen.
I finally opted for a 3-family because, after talking to numerous real estate agents and watching the ads I concluded that I could get somewhat more money for the 2 units than for 1; that if I had a “down time” between rentals, it would only be half the rent, not the whole shot; that I had a larger rental pool to draw on for 1-bedrooms — there is less demand for duplexes at between $3500 and $4000 a month than there is for 1-bedrooms at $1700 to $2000 a month. I did not want shares, because I could forsee a revolving tenant situation. Also, if we renovated to a potential 3-bedroom, which we could have done, that meant a possible tenant occupation of 6 people (three couples), rather than 4 people (two couples in two 1-bedrooms). If a family rents, and can afford $3500 – $4000 a month, they’re going to be looking for (a) their own place as fast as they can afford it so the money is going for a mortgage, not pissing away on rent and/or (b) a garden duplex, because why pay all that money if you can’t have a garden and/or (c) temporary digs because the adults work for the UN or are visiting professors or some such, so you’ll have to find new tenants every one or two years.
That said, I did speak to one real estate agent who said she would have no trouble at all filling a duplex. And there are stable long-term family and share rentals. And singles can be high-turnover as well (though I have been a landlord for over three decades and most of my tenants move in for average 5 years — I’m not big on jacking up the rent if I’ve got good tenants).
I don’t know if this is any help at all. Figure your renovation costs both ways. Check with some of your local real estate people in Cobble Hill, and ask them to be honest, not tell you what they think you want to hear. Consider whether it’s a garden apt. or an upper duplex (which would actually have more space and light, though no garden). And call your best shot.
Good luck.
– It’s likely that one of the two solutions requires a change in the building CO. Is it worth it? / Can you afford it?
– what is the estimated rental price difference between the two solutions? Search Craigslist + local Real estate offices.
– Would you rather deal with “young” tenants or families?
– Let’s say you rent to a family you are not very happy with, will kicking them out at the end of the lease make you feel bad? I personally have a hard time being tough with families. Kicking out a 20 something it’s so much easier …
Good luck.
do you have two kitchens? if so, I’d say rent as two, you’ll get more money and I don’t think you can perfectly forecast who is “problem” tenant
if you don’t have two kitchens its probably not worth the renovation costs, you will be years making back that investment and you will have more turnover and stress with two units since you’ll double your tenant roll
not worth expense to change any current configuration.
that said, I would go for 2 rentals. Do the renting yourself without broker….and use best instinct on who seems less demanding(assertive and know-it-all types) and respectful and polite. And don’t try to always get top $$$.
Less turnover is better.
I would go with two apt. The logic is based on demographics. There are a lot of younger people with small or no family who needs to rent. On the other side it is harder to imagine somebody who has a family big enough for duplex and does not own his own place. Same applies with rent income – check how much you can fetch for two apt. v. duplex. I am sure duplex will lose. Same applies for steady income – you always will get at least half of full rental income.
I’m in Carroll Gardens and I would go for 2 simplex apts and rent to singles. I have done all combos and had the most problems (noise, damage and late rent/bounced checks) first with families and then with couples. I have found singles to be the best. When I was renting a duplex I preferred shares which worked out much better than families. You have more flexibility and fewer restrictions re both the house and tenant legalities by keeping it 2 family. Screen well in any case.
That could also depend upon the current configuration and it you need to renovate to accomplish this. If it’s a two-family and you want to go to three, you may end up having to sprinkler the whole building at a major cost. If it’s already a three family and you’re keeping it that way or converting it to two, then you won’t need to add sprinklers.
Jim Hill, RA, LEED AP
Urban Pioneering Architecture
I, for one, would always go the double duplex route, primarily because being a landlord is not always easy even when you have someone who pays rent on time. The dynamic of two different tenants, the possibility of their complaints about noise, usage, etc. all speak to one rental being easier to manage than two. Also, I recently had opportunity to shop for a rental in the Slope for a friend and was shocked to discover that rental prices in the brownstones seem to have taken a dive, probably because of all that brand new shiny housing opening up down on 4th Ave and in the S. Slope. So it is no longer easy to rent an older apartment for top Slope dollars. All the evidence is that it is in fact families who want to live here, so your strategy of appealing to the school district families may well pay you as well as having two separate rentals.
Good luck,
duplex. bad tenant risk is the biggest risk. plus chances are better on lower turnover via a duplex renter than simplex ones. of course trade off is less rent income as 2 simplex would net more than a duplex – albeit, smaller difference when you factor in higher cost via the 2 simplex (ie more water use, heat use,….)