As to the conversion form units back to a SFD...
Is that a CASH REGISTER I hear ringing in the back ground? Renovations and conversions are complicated, time consuming, and VERY expensive. Sellers need to consider fees and permit costs, architectural plans, and dealing with the planning and building department.
This can be OK if you are very experienced with construction and have lots of extra TIME and MONEY. But if time and money are an issue, this renovation will be both a headache and a nose bleed that doesn't quit for about 1-2 years. OUCH!!
As to the value of rental units...rents seldom justify sale price in SF. GRM and Cap Rates do NOT usually work on small buildings. Most buyers will consider the value of the owners unit and upside potential on RENTS and/or VALUE ADDED on the possible conversion to TIC units. If any units are VACANT, this greatly increases the value of the property. My suggestion is:
1. Consult an experienced SF architect as to potential costs and fees involved on conversion or renovations. (I have a local SF architect who will give you a FREE consultation for 30 minutes).
2. Consult several experienced REALTORS to give you value estimates and ideas for marketing the units AS IS with suggestions on enhancing the value without costly renovations.
The Azari Group
#1 Property Management Company in San Francisco
In any case, it would be best to analyze values for each property type (single family, units and TICs) and then decide which makes the most sense for you and for the particular characteristics of the property.
I have been through this analysis many times with similar properties and have seen the results vary a lot.
TRI Coldwell Banker, SF's #1 Office
Have a nice weekend and stay dry.
It seems like in itsâ€™ current use, you could market to the owner-user as well as the investor buyer. Two out of three is not bad!
Cheryl Bower, Realtor , GRI, ABR
Zephyr Real Estate
After we determine the status of all that then I'd do market analysis on which product type would generate the most activity.
If it's vacant and zoned as a multifamily you might consider selling it as a TIC. Also in some cases we could offer it in multiple ways and let the eventual buyer decide what they want to do.