I have recently entertained the idea of investing in a 4+ rental unit. All my properties are 2 units and I understand the concept of increased volume for a potential increase in income. I am also well aware of the differences managing a 2 unit versus managing a multi unit will be (a topic for another post). What I was not expecting is the unit layout nightmares I have seen while engaging in several walk through’s of potential investment opportunities. I might be spoiled by the 2 unit layouts which all make good use of design flow and space and are not the carved up multi floor near disasters I am seeing in my local real estate market area. I will give you a taste in words of one typical examples.
A Six Unit in a Good neighborhood, Fair Market Value
The realtor allowed us to see a unit on the first and third floor of the property and stated there were 2 one bedroom and 4 two bedroom units. The first thing I noticed is parking for 4 with little chance of any on street parking. There was a narrow paved path to one side of the property but a concrete 3 step stairway blocked any chance of adding additional parking on the property.
The first floor housed the 2 one units with a central staircase between. Stepping into the first floor unit brought you into a 12′ by 12′ room which was called the bedroom. It had a closet and a second doorway that led into the kitchen. The kitchen was about 10′ by 12′ but had little room for a table as the doorway leading into the bath was in the path of the doorway leading to the ‘bedroom’. There was a pantry area in the kitchen wall facing directly under the stairs. The full bath was small but usable and that was the end of the one unit tour. Where the hell is the rest of the apartment? The outside foot print of the property seemed to be about 40′ by 30′ so I was expecting to see at least another 12′ by 12′ room. I later learned that the back stairwell area chewed up the remaining square footage. My comment to the realtor was, OK so the first floor has 2 studio apartments.
The second unit I toured on the third floor shared the same layout as the other 4 units. Entering the unit brought you into the kitchen, hey that’s a step up from entering a bedroom! The layout was about 12′ by 14′ and had a doorway to the right and left near centered on the kitchen layout. On the right was bedroom one with kind of a ‘french door’ door way minus any doors. The bedroom had no closet and measured about 12′ by 14′. The second bedroom was about the same but did have a small closet and once again that was the end of the tour. Turning to the realtor I said, OK there are 4 one bedroom units and 2 studio units. She agreed.
Curious as to where a fourth of the square footage went in this property, we found it in the side entrance which seemed to have been carved into the overall layout sometime after it was built. The oddest part was the entire other side of the property had a large wooden staircase running along almost the entire side of the house leading to all floors but having no obvious entry on each floor (aside from opening a window). The stairways had somehow taken over the property leaving it in its present compact state. The asking price was simply not inline with the usable square footage and bedroom per unit description.
I have had many similar experiences looking at 4+ unit rental properties. My wife and I have often mused that if we had the time, money and energy we would have a multi unit constructed that made sense when it comes to unit layouts. I am a bit amazed that we can’t seem to find one suitable within the 6+ towns in our area, even if it was above our price range.