Should I convert my home?
So I did the math over for my home at least a dozon times. I want to make my home from a two family to a three. Two of the parts I rent out and one I stay in. All together I get 3800 in rental income. All my bills add up to 3215. Mortgage, taxes, loans, food, etc. In the end I have 485 in profit. Then I add 2000 a month (or 1650 since I sometimes take days off) I get after taxes from my Job. I'll have 2485 (2135 with days off) a month. Should I do this and sacrifice having a large home for a few years or should I stack up money now in my early thirtys?
I ask this because my home won't be paid off until I'm in my sixties. But I could double the payments now and pay it off sooner. Im 32 and theres 27 years left of payments.
Btw Im a school bus driver so I only work either 10 months or 11. The 11 is if I work a summer school route.
- JudyLv 79 months ago
If the house is big enough and there's a reasonable way to convert to having one more unit, could be good financially. But btw, you have 485 in additional cash flow, not profit - your taxable profit is very different from that. Your net rental income is taxable income, and must be reported on your annual tax return.
- babyboomer1001Lv 79 months ago
It seems like you have thought it through financially, but you have not accounted for bad tenants, or good ones that might lose their jobs and don't have savings. You need to have reserves if you are going to expect a tenant's rent to cover any portion of the mortgage. Also, you will have to inform your homeowners insurance so they can change the policy from covering just your home to including the rental properties, even though you haven't added on sq. footage. Since you will be renting out a portion of your house, even if you section if off separately, you will still have to inform them so they can appropriate the policy properly. That may or may not cost you extra - I'm not sure, but you will have to do it, or you risk a very expensive lawsuit. Aside from that, if that is what you want to do, and you don't mind compromising your privacy and there is enough parking for tenants, then it's your choice. Oh - one last and VERY important detail. You will also have to talk to your mortgage lender. This should be the firsts thing you do. There MUST be a renter's designation on the mortgage. If you don't have that, then you cannot do it, or you risk foreclosure. Good luck.Source(s): Certified Paralegal, with 25+ years' experience.
- SimplytheFACTSLv 79 months ago
what about construction costs? is it allowed in that neighborhood, many won't allow 3 family or larger
- A HunchLv 79 months ago
How much will it cost you to make the 2 family into a 3 family?
- each area needs a kitchen
- you need to comply with bathroom regulation numbers
- is there enough bedrooms to do this
How much will it cost to get the permits and the certificate of occupancy?
Is this even allowed in your area?
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- PearlLv 79 months ago
i would if thats what you want to do
- Anonymous9 months ago
You forgot about building and zoning laws
and you didn't factor in the cost of the renovations