Legal Triplex conversion

[Tigran Badalyan]

Hi there,

I have duplex zoned R-2 with non-conforming 3rd unit. The city is ok with it to stay as it's been built many years ago and there are permits for it.
I was thinking if there are benefits to legalize it? As obviously it would not affect my cash flow and probably will drive taxes up. After talking to City they proposing to rezone to R-3 and make it legal triplex.
I'm wondering how this density increase will affect land price and property itself as I heard mixed opinions? Will that drive property price up and help build additional equity?
Appreciate your advice!

Thanks
Tigran

 

[Tina Myrvang]

Hello Tigran,

Where is the property? City and Province?

 

[Tigran Badalyan]

Hello Tigran,

Where is the property? City and Province?

Hi Tina,

It's in Campbell River, Vancouver Island, BC

 

[Tina Myrvang]

Thank you, that will help others with your question. You can also click on the Forums tab and search the forums for key words. I would search CONVERSION. I saw a few historical posts on that subject.

 

[Thomas Beyer]

Convert unless you have to invest heavily into retrofits ie fire code, new windows etc

You can then sell up to 3 individual units if you so chose. Ensure the mortgage allows it or get three mortgages.

Yes you ought to see a value bump above cost.

You need a strata corp too to regulate costs for utilities, doors, roof, reserve fund etc

 

[Tigran Badalyan]

Thank you, that will help others with your question. You can also click on the Forums tab and search the forums for key words. I would search CONVERSION. I saw a few historical posts on that subject.

thanks, Tina, sure I'll search that!

 

[Tigran Badalyan]

Convert unless you have to invest heavily into retrofits ie fire code, new windows etc

You can then sell up to 3 individual units if you so chose. Ensure the mortgage allows it or get three mortgages.

Yes you ought to see a value bump above cost.

You need a strata corp too to regulate costs for utilities, doors, roof, reserve fund etc

Thanks for the advice Thomas!

 

[Thomas Beyer]

Next stop: talk to a surveyor, get it measured and drawn up and submit it to city and land tithes office to create three new titles.

Then create strata corp to deal with issues like who pays for landscaping, fence repairs, exterior paint job, window replacements, new door knobs, reserve fund seeding, water/sewer metering, monthly contributions etc

There are likely costly surprises ie electric metering, water distribution & metering, heating etc

 

[Tigran Badalyan]

Next stop: talk to a surveyor, get it measured and drawn up and submit it to city and land tithes office to create three new titles.

Then create strata corp to deal with issues like who pays for landscaping, fence repairs, exterior paint job, window replacements, new door knobs, reserve fund seeding, water/sewer metering, monthly contributions etc

There are likely costly surprises ie electric metering, water distribution & metering, heating etc

Appreciate your advice Thomas!

I’m planning to keep it as rental at least in foreseeable future. Its all metered separately.
I was thinking to go through this process to force appreciation and bulid extra equity in it but heard very mixed oppinions about how dentisty increase can affect land value.
Hope it will hepl to increase price as my cashflow obviously will stay same.



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[Thomas Beyer]

Think of it more as an exit strategy. It costs money and has no value while renting it as it’s unimportant for a renter. It may help though with mortgaging ie now you got three units, separately appraised that can be refinanced at different times and/or sold separately if desired.


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[Tigran Badalyan]

Think of it more as an exit strategy. It costs money and has no value while renting it as it’s unimportant for a renter. It may help though with mortgaging ie now you got three units, separately appraised that can be refinanced at different times and/or sold separately if desired.


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Yeah, that totally makes sense, got it!
My only worry was that it might negatively affect my appraised value instead of adding there. Otherwise, I'm prepared to go through it.

 

[Thomas Beyer]

Yeah, that totally makes sense, got it!
My only worry was that it might negatively affect my appraised value instead of adding there. Otherwise, I'm prepared to go through it.

Do some local market research and/or talk to an appraiser re insights. 3 condos indeed may be worth less than a house plus two suites !


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com

 

[Tigran Badalyan]

Do some local market research and/or talk to an appraiser re insights. 3 condos indeed may be worth less than a house plus two suites !


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com

Yup will do! thanks again Thomas!

 

[KeithnCalgary]

Having the third suite as legal then ensures that the rental income for that unit will be used by all lenders for qualifying for future mortgages. Nothing worse than trying to qualify and having rent for a unit excluded because it is not a legal unit.

 

[Tigran Badalyan]

Having the third suite as legal then ensures that the rental income for that unit will be used by all lenders for qualifying for future mortgages. Nothing worse than trying to qualify and having rent for a unit excluded because it is not a legal unit.

Thanks for great point, Keith!