Duplex Conversion to Single Family

[Wesley Wooley]

Question? I have a small duplex that they want to covert to a single family residence and trying to go FHA. There are two entries, 2 electrical meters and of course 2 kitchens. I'm sure access from interior will have to be opened up, anything else for sure or will the remainder just be functional obsolesence? Thanks for any help before I call FHA/HUD.

 

[Don Clark]

The second kitchen will likely need to be removed, and the second meter will need to be removed. Otherwise it could be converted back to 2 units. That would conflict with the type of loan that FHA will insure.

 

[AlwaysLearning]

Question? I have a small duplex that they want to covert to a single family residence and trying to go FHA. There are two entries, 2 electrical meters and of course 2 kitchens. I'm sure access from interior will have to be opened up, anything else for sure or will the remainder just be functional obsolesence? Thanks for any help before I call FHA/HUD.

Why would you need to call "FHA/HUD"?

If you feel you must call, then (first) call the municipality where the subject property is located and inquire about the proper permit

 

[Wesley Wooley]

Thanks guys, I thought the meter and kitchen would but wanted to check with appraisers who may have come accross this before. I'll make the local calls also, I haven't seen the property yet just getting info from the lender.

 

[Mr Rex]

Why would you need to call "FHA/HUD"?

If you feel you must call, then (first) call the municipality where the subject property is located and inquire about the proper permit

Why not? Too many appraisers will take a lender/brokers word for FHA rules, but are "scared" to call the HOC. If in doubt, call the HOC is probably the best advice to any question asked by an appraiser.

 

[AlwaysLearning]

Why not? Too many appraisers will take a lender/brokers word for FHA rules, but are "scared" to call the HOC. If in doubt, call the HOC is probably the best advice to any question asked by an appraiser.

Given the above, it appears that you have read the first part of my post (oh, splendid): “Why would you need to call “FHA/HUD”?”

And now, please, you need to notice the second part of my post: “If you feel you must call, then first call the municipality where the subject property is located and inquire about the proper permit”

I do not believe that my post communicates anything about lender/brokers, is it?

Given that only the municipality (where the subject is located) determines what a legal single family residence is (or what is needed to convert a duplex into a single family residence), it is logical to inquire there first.

 

[Don Clark]

Given that only the municipality (where the subject is located) determines what a legal single family residence is (or what is needed to convert a duplex into a single family residence), it is logical to inquire there first.[/FONT]

That's not exactly true. FHA, VA and Fannie Mae also determine what a single family is for their purposes as well. Each has a set of criteria that determines, for their loan purposes, what constitutes a single family, as well as a 2-4 family property. A municipality may have a different criteria from FHA, VA or Fannie Mae. A municipality may not allow such things as a barber shop, beauty salon, or some other business in a single family residential property but FHA and VA does.

In the OP's case, checking with the HOC would be a prudent thing.

 

[HF Mudd]

Have you considered the Highest and Best Use of the subject? If the subject's highest and best use is as a two family property, that's the way it should be appraised regardless of conversion.

BTW, who are "they"?

Who is ordering the appraisal?

What is the purpose of the appraisal?

All vital information if you want useful answers.

 

[AlwaysLearning]

Given that only the municipality (where the subject is located) determines what a legal single family residence is (or what is needed to convert a duplex into a single family residence), it is logical to inquire there first.

That's not exactly true.

Really, so in your opinion, what other entity decides the legality of improvements?

FHA, VA or Fannie Mae requirements are secondary issues.

Are you saying that if a property is determined to be single family by FHA, VA or Fannie Mae then this would suffice (to be legal)?
It would be new to me, however it could be a local thing.

FHA, VA and Fannie Mae also determine what a single family is for their purposes as well. Each has a set of criteria that determines, for their loan purposes, what constitutes a single family, as well as a 2-4 family property.

True, no argument here

A municipality may have a different criteria from FHA, VA or Fannie Mae.

True, no argument here

A municipality may not allow such things as a barber shop, beauty salon, or some other business in a single family residential property but FHA and VA does.

If a municipality does not allow the above (my red) things in a single family residential property then the property with such things is determined to be illegal use. And the fact that FHA (and/or VA) does allow the above (my red) things does not help much with the legality of the property (or you think it does)? H&B Use comes to mind.

In the OP's case, checking with the HOC would be a prudent thing.

Prudent? Sure,
Necessary? Maybe

 

[Wesley Wooley]

I haven't been to the property yet. But the way it sounds it will be outside of the city limits on 4 acres and only 1250 SF total. So highest and best use would probably be single family if it is converted.

This started as a duplex with the buyer wanting to convert it to single family after the purchase but there are only 12 duplex sales in this city over the last 12 months (all prices and no parameters set yet) with none on acreage. So the agents are now trying to do the conversion before hand and go single family and there would be better suitable comps if the conversion was done correctly.

Thanks again for the input.