It is all too typical for an advertised “3 unit” home to actually be a legal 2 family when you are approaching closing and try to obtain your CO. This can sometimes kill the deal as the town will require you to remove this tenant which will in turn significantly reduce cash flow or you will face ongoing fines. This however does not need to be a deal killer. It may require a discount off the original price, but a buyer can still use this space in other ways in which will not violation city code.
Option #1: Does the city allow for finished space in this illegal unit? If that is the case, then you can finish the illegal unit space and rent it as a duplex unit with the legal unit for additional money. An ideal tenant is an extended family that will get along and be able to afford the higher than market rent for a multi floor unit. They must be on one lease to avoid getting fined as the city may assume it is being rented out separately.
Option #2: If the city does not allow for any finished space whatsoever in this unit, then you can section off the unit into 10’ X 10’ rooms with doors that lock on each space. You can then advertise online and in the window you have storage space for rent. You can study the local self storage market rental rates and apply a discount to that number given it is not a professional facility. You will need to make sure no hazardous materials are kept in the units and they do not disturb the existing occupants by constantly going in and out.
Option #3: If the city does not allow you to put up walls for storage or you do not want to go through the hassle of renting them out, then you can also install a washer/dryer unit for each legal residential unit you have in the building. You can offer the laundry facilities to your existing tenants for an additional monthly fee. Contact us to find out how we can help you.