How to convert a 2 unit condo into a duplex for financing purposes?

Asked by nepoc74, Somerville, MA Wed Jun 26, 2013

I own one unit of a two unit condo "complex" and would like to purchase the other unit that's for sale. The plan is to rent one unit and live in the other. I've run into an issue with financing and it seems to be an underwriter concern related to one person owning more than 50% of the development. One solution that has been proposed is to convert the two units into a duplex. How long does this process typically take and what are the average costs? Are there any other options to own both units? My local credit union has put together a financing package that would work but it's an ARM with 20% down and I would prefer a 30 year fixed with 5% down.

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Ritchy Haynes’ answer
Ritchy Haynes, , Denver, CO
Tue Jul 2, 2013
You would need to speak with the county etc. to have it rezoned. This may or may not be allowed and thus you are best speaking with the municipalities. Another option would be to do the one as owner occupied with the 5% down, and then do the other as investment with 20%. Would save you 15% of one units price.
1 vote
John Juarez, Agent, Fremont, CA
Mon Jul 1, 2013
I do not think that what you propose is feasible. You would have to have the two condo units reclassified or rezoned as a duplex by the local government entity. I doubt that will happen. You would also have to convince the HOA to allow their condo complex to have two of the units converted to a duplex. I don’t see that happening, either.

You need to look for a new lender who will lend in this complex.
1 vote
Robert McGui…, Agent, Denver, CO
Thu Jun 27, 2013

I agree with Bob below. I would talk to a good local real estate attorney. This is a unique problem and the best solution seems to be to purchase the other unit with 20% down as an investment property. A good ARM could work well. You will need a team of a good Realtor, an expert lender, and a good real estate attorney. Good success with your venture.

Robert McGuire
Your Castle Realestate
1 vote
Mack McCoy, Agent, Seattle, WA
Wed Jun 26, 2013
Well, you can't. You and the other owner can dissolve the condominium; this will require expert legal assistance and it may have an immediate effect on your existing mortgages.
1 vote
Bob Gordon, Agent, Boulder, CO
Wed Jun 26, 2013
This is a very tricky process. You will need an expert legal adviser and you should first check with the governing city to see if it will even work. There will be tax issues (once merged, taxes would be doubled?), Title issues, lot/ownership. It is a big deal to split a property into two parcels and an even bigger one to take two properties and make one from it. I would first start by finding very good legal assistance.
1 vote
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