Making garden apartment a rental vs. upper duplex rental

I know there is a big difference in rental income between these two types of rentals, but I’m wondering if people with either could share some of their experiences. We are in contract to buy a 4 floor townhouse in bed stuy close to clinton hill. Right now it is configured as a double duplex. We assumed we would rent the top two floors and live on the garden and parlor floor for a few years and then eventually live on the top three floors and rent the garden. Now that we are contemplating the renovations that need to go in to make the garden level livable for us, we are thinking that it might be better to just renovate once and make that floor an apartment now. I know we would have to get a C of O for this configuration, but I’m not sure this would be too hard since it doesn’t have one now and is designated as a two family. But of course this means less monthly income…Can anyone who has either option comment on the benefits of these configurations. Specific questions:
1. To get the higher rental income for a double duplex, would we need to rent to roommates? Is it hard er to find a family to rent a bigger place that costs 4000+?
2. With a garden rental, how do people handle the garden access? We would not be giving that rental the garden exclusively but would consider sharing it? Does this work?
3. We have two loud kids- what would be most harmonious living situation?
Thanks!

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in General Discussion 8 years and 2 months ago

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EJR | 8 years and 2 months ago

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I personally think that you should renovate now to accommodate your long terms needs, and not “switch” apartments in a few years. You need to factor the cost of the renovation (and another renovation down the line) into the value of additional rental units. For instance, I bought a 3 story house in 2014 that needed renovations. I could have created a garden unit and lived on the top two floors. I also knew that in ~10 years or so, when/if I had a couple growing kids, I would want the extra space from the garden level, which would have meant yet another renovation. Factoring in all these costs, it just didn’t make sense to create a rental unit.

In your situation, if it were me, I would do a garden rental plus triplex and rent the garden level. Nicely renovated, you could probably command $2,500+ for this space, depending on configuration. Rent it to a single person or young couple, stipulate in the lease that backyard space is shared. Make sure that the unit has all the amenities (dishwasher, mini-splits if you are doing a gut reno anyway), and that there is shared laundry somewhere in the building.