Basement Renovation Budget
“Non-conforming” Duplex
That’s a word that is tossed around Minneapolis quite a bit. You see, there is a housing shortage in the Twin Cities, which has been present for quite some time. So strategic duplex owners have taken it upon themselves to update some of their basements (or attics) to increase the property’s rental income. Ultimately, this is a smart idea and benefits not only the landlord, but also the additional tenant that is able to find housing. However, the city likes to keep an iron grip on housing permits and code, so some of these additions are not “technically legal”.
How can that be you might ask? Well, every city has specific residential and commercial zoning throughout a city. So, if a duplex is updated to have three units instead of the original two, and sits within a residential zoning ordinance of two or less units, the third unit is therefore not a legal unit.
This is where the “non-conforming” term comes into play. A lot of duplexes that have a finished basement (or attic), are labeled as “non-conforming”. This is just a fancy way of saying that they legally have not gone through the city to make these additions, and the extra unit is therefore not up to code to pass as a true triplex.
Now this isn’t always necessarily a bad thing (in my opinion). It most likely is benefiting both parties (tenant and landlord), and could be perfectly safe. There’s a catch though. Every 6-8 years a city inspector will come out to a rental property to ensure the landlord is following safety requirements. This helps protect tenants against bad landlords that aren’t following basic safety rules and regulations. Think smoke detectors, broken windows, etc. Depending on the inspector, they might let this additional unit slide or not for whatever reason.
Well…I unfortunately wasn’t so lucky. After I purchased my “non-conforming” duplex in fall of 2016, my city inspector came through in the fall of 2018 and informed me that no permits had been pulled on my basement unit for the work that had been performed, and that it was illegally being rented. Seeing that I was the building owner at the time of inspection, I was therefore liable. Thankfully, no citations or fines were given to me. The worst part was to have to ask my tenant to leave the unit, lose that additional rental income, and then have the range removed and gas line capped. My biggest three learnings…
Check for permits prior to purchasing a property that has clearly had work completed.
Understand what it would take to bring the building up to code and if it meets the minimum requirements.
Keep your tenant within the third unit on a month to month lease, so that if you are asked to have them move out, that flexibility is written within the terms of your lease agreement. (The city is good about allowing some flexibility with move out dates as long as you are “working towards” the solution they’ve outlined).
2040 Plan
That brings me to where I am today! Thankfully, the city of Minneapolis reviewed their zoning regulations and realized they were going to have to make some changes to reduce the housing shortage. With that update, known as the 2040 Plan, my lot has now been rezoned to allow for three units. Great news right?! YAY!!!!
Well…If you’ve been following along in my instagram stories, you’ll know that my next step is to have some work performed to bring my third unit up to code. This means pulling permits from square one.
Busting holes in my finished unit walls to have inspectors check things such electrical
Tearing out the kitchen cabinets to update the bathroom and kitchen plumbing to code
Knocking down all of the ceilings to sound proof and fire rate the sheetrock
And so much more! My HOPE is that the city passes my project plans that I have outlined with my General Contractor (GC) and Architect very soon. This will ultimately allow us to get started on the path to transforming my building into a LEGAL triplex!!
Budget
With projects like this, your budget can be somewhat of an unknown thanks to all of the variables that come into play. However, I love transparency, so I wanted to share with you my initial estimates. Then, when the project has been completed, I’ll be sure to update you on what the final numbers came out to be. (For context, this is an 800 sq ft basement studio).
High level Breakdown:
$32,000 worth of materials and labor
$8,000 buffer for unknowns - brings the total budget to $40,000
Increased resale value of an additional $100k
Annual earnings of an additional $13,200 per year
Itemized Breakdown:
Architectural - $1,000
Demo - $2,500 (To save on contractor expenses, I will be owning this)
Painting - $1,750 (To save on contractor expenses, I will be owning this)
Doors - $300
Electrical - $5,000
Lights - $75
HVAC - $100
Plumbing - $2,500
Plumbing Fixtures - $500
Cabinets - $3,000
Countertops - $1,250
Framing - $1,000
Lumber - $350
Millwork - $350
Carpentry - $1,000
Insulation - $1,700
Drywall - $5,160
Tile work - $2,500 (To save on contractor expenses, I will be owning this)
Permit - $1,000
Dumpster - $400
Misc materials - $350
Misc labor - $500
GC fees - $6,500
I hope that context helps! I’m excited to bring you along for my journey and will be sure to continue to share any learning’s. In the meantime, think positive thoughts for me. The less surprises along the way the better!
Cheers!
Jen
