Brian, Both Buyer and Seller in Mountain View, CA

Keep as a new duplex or split units into two?

Asked by Brian, Mountain View, CA Mon Sep 15, 2008

I own a duplex on the 190 block of Easy Street in Mountain View. When I eventually sell (1 year), am I better off keeping the duplex as whole, or splitting it into two separate units, and selling them individually? What is the procedure for splitting the property into separate properties, what is the cost, and how do I weigh whether or not this is a good decision?

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Hi Brian,
I have some insight on this since I just listed and sold a property pretty close to your duplex on Easy Street in Mountain View. If you split your duplex, will one unit be on the inside and one on the outside? If so, then the owner on the inside will have to be somewhat dependent on the cooperation of the owner on the outside to get through to his property. If you sell as a duplex, then the person will own BOTH units so won't have to worry about another owner.
0 votes Thank Flag Link Sun Apr 22, 2012

I'm not sure that this is a good business decision, but it depends. I'm afraid that I have more questions than answers. Hopefully my questions will help you think it through a little more.

You need to look into the tax ramifications first. Are you doing a 1031 exchange when you sell? Are you doing a 1031 exchange for 1/2 the duplex when you sell? What are you going to do with the proceeds? Are you living in one side and renting out the other. How long have you owned it? How much depreciation?

Why would you split them? Are you hoping to attract more buyers? I personally don't think you will. If I'm a buyer, I would rather buy a duplex and live in one side and rent out the other. Otherwise, I would just buy a townhome. I might buy one unit of a duplex if the duplex offered something unique that other townhome''s couldn't. For example, there was a duplex in Mountain View that did exactly what you are thinking. The owner subdivided the duplex into two legal units. She also had to creat eCC&R's for the new multi-unit (2) building. This worked because the unit was in the Los Altos School district and offered a townhome like living arrangement with los altos schools for far less than anyone could get in a "normal" townhome. She also stayed in the second unit so she got money to live off of..

Keep the duplex as it is and sell the whole thing off in a year. It's less complicated, less expensive and will allow you more flexibility down the line.
0 votes Thank Flag Link Mon Sep 22, 2008
You are asking the right questions. You goal is to get the answers, weight the options, pros and cons, then move forward as appropriate.

In my opinion the person that analyzes your situation needs to know three things:
1. Your personal situation
2. The duplex
3. The local market trends and values.

Timing is everything. Getting expert counsel from a CPA, REaltor, Financial Planner would be a real plus.

Good luck
0 votes Thank Flag Link Mon Sep 15, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
Hi Brian,

Splits like this are common in San Francisco, and the result is a tenants-in-common ownership of the property. It is less common in Mountain View. I suggest that you go to City Hall, and see if they will let you do the split, and what the requirements are. Some properties lend themselves to splitting better than others.

Doing a 'legal' split is critical, because when you go to sell, the lender and the appraiser are going to look closely at the property. Doing you due diligience here before spliting is critical. Since there are probably not a large number of comparables nearby, you would need to be in a positon to arm them with data substantiating the value.

Another problem you may have is your current lender. If you are splitting the property, and therefore changing the legal description, your existing lender may call the loan. Getting a new loan shouldn't be a problem after the split, but it will add to your expenses. I own a rental property down the street from you, and would be happy to discuss ideas with you.
0 votes Thank Flag Link Mon Sep 15, 2008
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