Converting 2 into 3 family - pros and cons?
We will be doing a renovation and considering changing the CFO from 2 to 3 family. Pros / Cons from personal experience would be much appreciated. How long will that take and will it drastically change the taxes. TIA!

somedaytheocean
in General Discussion 4 years and 4 months ago
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somedaytheocean | 4 years and 4 months ago
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This is very helpful. Thanks so much!

krobertson
in General Discussion 4 years and 4 months ago
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From everything I’ve heard, doing an alt-1 with a CO change will dramatically impact your taxes. As jimhillra stated once you’re a multifamily there are more rules you have to follow, from more stringent buillding code (skylights, fire rated doors, sprinklers, etc), local law 152 gas inspections, to more mundane like no gas grills allowed, and you have to register with HPD and deal with their rules. You can just run the numbers projected rents and payback period. If you’re taking a decent size 2 fam and squeezing a third studio or tiny 1 bed into it, the additional rent you take in will likely make the payback period extremely long. If you’re building an addition for the 3rd unit, it’ll probably be better.. Also consider your neighborhood, if its rapidly gentrifying, filled with families or singles? In places like Park Slope, which is high income with mostly families, I imagine most folks are converting down units for more bedrooms instead of increasing the number of units.

jimhillra | 4 years and 4 months ago
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We’ve done a number of these, and there are quite a few issues to discuss related to code. First and foremost will be sprinklers. There’s a decent chance you could have to sprinkler the entire building. That could easily be $40k. Aside from that, you’ll be putting the building into a multi-family category, which has more stringent rules than 1 and 2 family. I’d be happy to discuss it with you. Please email or call me. You can get out contact info at our website: www.urban-pioneering.com