Author Topic: Good idea to refi my SFH and convert to Multi-Family?  (Read 1372 times)


  • Bristles
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  • Posts: 300
  • Location: Minneapolis
Good idea to refi my SFH and convert to Multi-Family?
« on: December 23, 2019, 02:29:16 PM »
Greetings all,

I am considering cashout refinancing my primary residence SFH so I can use the money to convert the 3rd floor into a unit I could live in for free or close to free.

My financial situation:
- Not married, under 30.
~38k in retirement accounts
~10k in cash on hand
- I own a reliable used vehicle
- Decent career in IT making 80-100k/year (w2 contracting, employed 8-12 months per year)
- No student loans or credit card debt

Details of primary residence:
- bought for 280k in 2016
- currently owe ~250k @3.5% fixed
- Market value is 330-360k (gentrifying neighborhood)
- ~3000sqft (2 floors 100% finished, 3rd floor is has some rough drywall and subfloor, but mostly finished)

I want to take refinance my house and take the extra money to renovate my 3rd floor and turn the house into a multifamily.  I would plan on living in the added unit for at least a few years.  I think it will take between 30-40k to do all the necessary renovations to turn the 3rd floor into a nice unit.  This would involve plumbing a new stack to the 3rd floor (~15k), adding a huge deck to the back of the house so I could have access to the unit (~12k), and finishing out the living space on 3rd floor with appliances and flooring (~15k?).

I could rent out the 1st and 2nd floor for between $2200-$2600, and I estimate my monthly payment on the new 300k mortgage would be ~$2100.  The utility costs average about $400, so the house would basically cost $2500/month to cashflow all utilities/taxes/insurance/etc.

If I had the additional 3rd floor unit totally finished and I moved out of the house, I could rent it for ~$1,200/month bringing my total monthly take to ~$3500/month, while having total housing costs @$2500/month. 

Mustachians, does this sound like a good idea?  Has anyone here done something similar?

« Last Edit: December 23, 2019, 02:31:44 PM by humbleMouse »


  • Bristles
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  • Posts: 393
  • Location: U.S.
Re: Good idea to refi my SFH and convert to Multi-Family?
« Reply #1 on: December 25, 2019, 08:49:51 AM »
Have you looked into your local zoning requirements for doing something like this? Thatís the place to start.


  • Walrus Stache
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  • Posts: 8116
  • Location: Fayetteville, NC
Re: Good idea to refi my SFH and convert to Multi-Family?
« Reply #2 on: December 25, 2019, 09:03:31 AM »
Not sure I would buy a unit at that price to do that, but for one you already own and live in, it makes plenty of sense.

Double-check your zoning, permits and tax rates for apartments. Also for evictions.

When you do the work, try to do it in a way you can easily and cheaply convert them back into a single family house.   That way, when you sell, you've got two markets to sell to instead of one.  Especially since your fellow real estate investors won't want to pay top dollar. :)