YFP REI 120: Deep Dive: Converting to Highest and Best Use

Nate Hedrick and David Bright discuss strategies for increasing property value through repurposing unused spaces.

Episode Summary

Turning a hotel into apartments. Expanding a single-family house from a three-bedroom to a four-bedroom home. Converting warehouses into self-storage units.

Nate Hedrick and David Bright discuss strategies for increasing property value through repurposing unused spaces. Before jumping into a property conversion, David and Nate share the importance of understanding zoning laws and local market conditions to successfully execute these transformations. Tune in for ideas on how you can creatively repurpose your property for the best return on your investment.

About Today’s Guests

Nate Hedrick is full-time pharmacist by day, husband and father by evening and weekend, and real estate agent, investor, and blogger by late night and early morning. He has a passion for staying uncomfortable and is always on the lookout for a new challenge or a project. He found real estate investing in 2016 after his $300,000+ student loan debt lead him to read Rich Dad Poor Dad. This book opened his mind to the possibilities of financial freedom and he has been obsessed ever since. After earning his real estate license in 2017, Nate founded Real Estate RPH as a source for real estate education designed with pharmacists in mind. Since then, he has helped dozens of pharmacists around the country realize their dream of owning a home or starting their investing journey. Nate resides in Cleveland, Ohio with his wife, Kristen, his two daughters Molly and Lucy, and his rescue dog Lexi.   

David Bright is a pharmacist with a heart for teaching. He’s been a full-time professor since 2009 with a passion for implementing and improving pharmacy services. Themes of “implementing and improving” in the pharmacy space are quite similar to themes of “building and fixing” in real estate, which has been a growing hobby for David and his wife, Heather, who bought their first house more than ten years ago. That fixer-upper house became a live-in house flip, which they sold a few years later, only to repeat the process with their next house. When David and Heather got sick of perpetually living in a construction zone, they pivoted to fixing up rental properties in West Michigan, where they now live. 

David invests in real estate as a way to bring greater diversity to financial planning and to fund memorable life experiences with family and friends.

Key Points from the Episode

• Property use conversions, including adding bedrooms, converting hotels to apartments, and more. [0:06]
• Adding value to homes through legal bedroom creation and ADU development. [6:26]
• Converting single-family homes into multifamily units, with a focus on regulation and market demand. [10:18]
• Converting single-family homes into multifamily properties, including potential challenges and strategies for success. [13:43]
• Converting office buildings into luxury apartments. [19:47]
• Converting hotels to apartments, zoning regulations, and construction challenges. [23:11]

Episode Highlights

“I think people would be surprised that they might even realize what this is already. But the concept is pretty simple. Basically, what you’re doing is you’re taking something with an intended purpose, and changing that purpose, some sort of conversion from what it’s doing today to another use.” – Nate Hedrick [1:46]

“If you want really strong appreciation in your investment, you need to be strategic and creative in forcing that appreciation. And this can be one really good way to do that.” -David Bright [2:56]

“I really like this strategy [of adding a bedroom], particularly for long term rentals because, particularly in one of the markets where I invest, the rental rate for the building goes up pretty dramatically as you add a bedroom. So if you’re able to buy a property and increase the bedroom count, you can increase the rent rate and also oftentimes increase the property value.” – David Bright [4:49]

“So it can be pretty lucrative in terms of increasing the value of that property just by making a space that was already there into a legal bedroom for someone to stay in.” – Nate Hedrick [7:20]

Links Mentioned in Today’s Episode

• Subscribe to the YFP Newsletter
• YFP Real Estate Investing Podcast episode 102: Navigating Today’s Market with Economist Alex Cartwright, PhD
• YFP Plus 
• YFP Disclaimer
• Your Financial Pharmacist
• YFP Real Estate Investing Facebook Group
• Nate Hedrick on Instagram
• David Bright on Instagram
• YFP Real Estate Investing Website
• David Bright on LinkedIn
• Nate Hedrick on LinkedIn

Episode Transcript

Nate Hedrick  00:06

Welcome to the YFP Real Estate Investing Podcast. I’m Nate Hedrick.

David Bright  00:09

And I’m David Bright. We’re both pharmacists and real estate investors that believe that real estate investing does not have to distract from a meaningful career in pharmacy.

Nate Hedrick  00:18

Each episode, we share stories that educate and inspire pharmacists to leverage real estate investing as a part of your financial plan.

Nate Hedrick  00:30

Hey, David, how’s it going?

David Bright  00:32

Hey, good, thanks. How you doing, man?

Nate Hedrick  00:33

Great. We just wrapped up an awesome interview with Alex Cartwright, who we had back on episode 102. And, you know, well, that episode focused pretty heavily on a specific project, there was an underlying theme of reducing risk kind of throughout that project, which I feel like it’s kind of our theme, right? That’s like our tagline.

David Bright  00:51

Pharmacists reducing risk. How can I reduce risk by investing? 

David Bright  00:55

Yeah, exactly. But what I liked about that show, this episode was that we talked a lot about property use conversions, something that we haven’t spoken a lot about on the show in the past. 

David Bright  01:06

Yeah and property use conversion feels like super jargony, nerdy real estate stuff, right? Like, which is probably why as pharmacists like that intrigues us, you know, since we’re a little nerdy too. But I love concepts and real estate investing that can help reduce risk. And that’s where I think that this, not just reducing risk, because sometimes reducing risk means reducing your return on investment. This feels like a really interesting combination of improving your ROI and reducing risk, which is just a really fun combination. And so this is one that Alex talks about panning out on the large scale, but it also works in single family home investing and some of the smaller scale things. 

Nate Hedrick  01:46

I think people would be surprised that they might even realize what this is already, right? The jargon is there. But the concept is pretty simple. Basically, what you’re doing is you’re taking something with an intended purpose, and changing that purpose, right, and usually within the same bounds of zoning, but sometimes not right, like maybe if you got a permitting office, maybe there are Architectural Review Board things that have to change, right, some sort of conversion from what it’s doing today to another use. And Alex really talks a lot about converting a hotel to an apartment. And that’s, that’s the project that he focuses on for this episode. But we’ve mentioned other things in the past about how you could take, you know, a two bedroom, single family house and converted into a three bedroom house, or even I’ve heard podcast episodes in the past of someone taking an old, you know, up down retail unit and apartment unit and converting one of those into like a liquor store, for example. So that the idea of use conversion has been around for a while. Yeah,

David Bright  02:42

And doing this on a small scale. Like we’ve talked before about this two bed, three bed thing. Like, I love that strategy. We’ll talk about that more as we get into this. Because particularly in a market where we’re not seeing 20% year over year, appreciation any longer. If you want really strong appreciation in your investment, you need to be strategic and creative in forcing that appreciation. And this can be one really good way to do that. Yeah.

Nate Hedrick  03:06

All right. So so official spoiler alert, the we’re talking a bunch about hotel to apartment conversion. And David, you and I actually were lucky enough or fortunate enough to talk to Alex upfront, and we actually bought into this one, right?

David Bright  03:21

Yeah, quite literally, we’ve we’ve bought into this project, right?

Nate Hedrick  03:24

Yeah, exactly. And so there might be some listeners out there that are intrigued, want to jump in or decide to, you know, jump into an investment like that. And there are a lot of investors that would probably look at that and say, this is this is too specific. This is too niche for me, I’m not interested, right. So we want to zoom out a little bit and look at other conversion strategies, first. Give you an idea of some of the context to the episode that we’re going to be airing next. And let that example kind of play out. So you can you have a foundation for what this strategy looks like.

David Bright  03:54

Yeah, and again, because we are a part of this, and we’ll talk about that on the next episode with Alex, where we go much deeper into that specific deal on the large scale side of things. But as far as some of the smaller scale things that we could talk about as well. And one of the things we want to unpack in addition to this two bed, three bed example, we’re making more minor modifications to property. Let’s talk about single family to duplex. And sometimes that could mean adding an ADU, we can talk about what that is. We could talk about renting by the room. We’ll talk about conversion of a structure to self storage, or conversion to an apartment from a lot of different things we’ve mentioned hotel, but we’ve also seen examples of converting a school or converting an office building to apartments. 

Nate Hedrick  04:39

I think the easiest place to start is probably starting with just adding a bedroom, right.  David, I know you’ve done this several times. Maybe you just start by walking us through what that might look like. 

David Bright  04:49

I really like this strategy, particularly for long term rentals because particularly in one of the markets where I invest the the rental rate for the building goes up pretty dramatically as you add a bedroom. So if you’re able to buy a property and increase the bedroom count, you can increase the rent rate and also oftentimes increase the property value. So regulation is going to be different in different areas. But in one of the markets where I invest, the local regulation requires that a bedroom has direct heat. So something like an air duct or a baseboard heating elements, something like that, it must have a window, it must have a closet, and it must be at least 70 square feet in size. So generally, you’re thinking like a seven by 10 room, which isn’t really all that big. It’s not uncommon to find a house that may be marketed as a two bedroom house, but has like an office or a den that meets all these requirements except maybe one. And so for instance, it’s pretty common in my world to see an office or a den that essentially is a bedroom, it just doesn’t have a closet. And so if you can go in there, and you can build a closet, now you have a legal bedroom, and it’s you know, a few 100, maybe under $1,000 to add that bedroom. In other cases, we’ve seen houses that may have a small family room that is potentially too small to be functionally used as a family room. And so it turns off a lot of buyers, they kind of see it as wasted space. But if we can come in, and we can add a door and a closet, suddenly it’s a bedroom, and suddenly people are excited. And oh, I was really looking for a three bedroom house. But this is a four bedroom? This is fantastic.

Nate Hedrick  06:26

And it’s funny you mentioned the thing about the closet, right, being the piece that’s missing a lot of times. It’s actually what I think has led to the misinformation that’s out there that Oh, in order to add a bedroom, you just need to add a closet that comes out all the time, like no, there are all these other requirements to it. I seen somebody who will walk houses, we walk into like a basement den, and then like off, this is just a bedroom, I’ll just throw a closet over there. And it’s a bedroom. Well doesn’t have a positive legal egress. It’s below grade, which means you have to get different zoning. Like there are nuances to it. So definitely check your local area, right. But it can dramatically improve the value, right? If I’m looking at comparable properties, just as an agent, a two bedroom house is going to rent or sell to a very different set of individuals than a three or four bedroom house. All of a sudden, there’s room for, you know, a family or two different adults to live there, two different families to live there. And it just it starts to really expand who can who can be in that property. So it can be pretty lucrative in terms of increasing the value of that property just by making a space that was already there into a legal bedroom for someone to stay in. 

David Bright  07:30

I feel like with your with your realtor hat on, one of the things that I see on the MLS listing description for a property is a non conforming bedroom. Can you explain what that is for folks? Because I see that terminology all the time. 

Nate Hedrick  07:43

A nonconforming bedroom is just a really kind of tongue in cheek way, if you ask me, of saying, look, there’s an extra space here, you can put a bed and someone could sleep there. It’s not a bedroom, but you know, go ahead and use it however you want. Once it’s your house, you know, I don’t have to worry about it. So that’s that’s literally all it’s saying is like, you want to get by the regulations. Here you go. This is not a bedroom. Wink wink. 

David Bright  08:05

I feel like it’s it’s a nice cheat code for it’s probably easy to put a bedroom in here, compared with a lot of other houses. Because if it’s a nonconformity, like I see it all the time in my market, and excuse me in a basement. So a basement bedroom, where just like you mentioned lacks an egress, there might be like a glass block window. But there’s not a window capable of escape in the case of a fire. So that would be one where you could pull a permit, you could dig, you could put in a window, and for three grand, four grand, now it is a legal bedroom, you can count it, and you can increase the value, potentially much more than that three to $4,000 improvement.

Nate Hedrick  08:46

I think that’s the intended use of that term. I will tell you the often used version of that is, hey, stick a bed in here and you’ll be fine. So yeah.

David Bright  08:54

Oh, for sure. Yeah. But I think that to your to your point, though, that really does change value, right? When either value in terms of monthly rent, you know, you may get two or three or $400 more per month if that’s a legal bedroom in the property, if it is on an appraisal basis when you’re comparing to other properties in the neighborhood. Now that property depending on the area that could be 10, 20,30 $40,000 more in value, at least we keep talking Midwest dollars, right? Like in other markets, it can be even more than that. But so you can make small changes to a property that can really increase value and that’s that’s kind of along similar lines to an ADU. So could you could you define an ADU and walk us through what that would mean?

Nate Hedrick  09:42

Yeah, these are distinctly not Midwest in most cases. There are some. But an ADU or an additional dwelling unit is kind of like the name describes right it’s some other structure some other designated space that is designed to be a dwelling. These are a little more common out in larger cities are in areas where housing is a little bit tighter. And basically what you can do is if the city and the county ordinances allow it is under certain parameters, you can add a space, a lot of times again, it’s like a external structure, but it could also be a tacked on piece of your property, that is a legal dwelling unit. It’s a legal place that you could rent out. So the most common example would be like I have a big old shed in my backyard, I spend the time and money to convert it into essentially like a bedroom. And I registered with the city. And now it’s an adu on my property, and I can rent that out, or I can put it on Airbnb or wherever the city allows, basically. But it’s an extra piece of that property that you can you can have someone legally stay in. 

David Bright  10:43

Those rules can be very different from jurisdiction to jurisdiction, right. In fact, one of the markets where I invest in just changed those rules this week. And so it’s been a major shift in terms of now it’s much easier as far as parking requirements and owner occupant requirements, and some of those kinds of things that exist in some jurisdictions, that’s been waived in this one. And so now creates a lot of opportunity. Like one of the things that I’ve seen come up is someone taking two or three car garage that already has an electrical service and electrical panel, because maybe someone was using it as like a workshop. And it may be already has a hose spigot on it, so it already has water running to it. And now you could put some like a heating source and a sink and a bathroom. And you could you could have a small studio apartment built into this garage for not an exorbitant amount of money. And so if you can rent that space for $1000, $1500, $2000 in different markets, you can see pretty significant rents for a space like that. Suddenly, this garage becomes essentially the second unit of a duplex kind of thing.

Nate Hedrick  11:52

Yeah, I think like I said, the the ADU idea is definitely more popular in areas that are a little bit more densely populated. I’ve seen stories in like California, for example, where the city is actually promoting people to get to add ADUs, right. There’s a housing problem, we need more places for people to stay. If you add an ADU, here’s a tax break. Or if you do it, you know, you’re automatically approved by the city, basically, if you follow xy and z parameters. So that there are some incentives out there even to add these in certain cases.

David Bright  12:20

Yeah, I think we’re seeing that as well. One of the other things that that we wanted to talk about was single family to multifamily conversions. You know, creating a duplex out of a single family space. And I think a lot of that follows that that same kind of thing. And one of the markets where I invest in there, that’s now become a greater push, and some allowances have been made in the regulation. In fact, this kind of question about regulation came up in the the YFP Plus Community Q&A sessions over the past few weeks. You know, in April was real estate investing month in that community. And so one of the questions that came up was, what’s going on with regulation? And how does that impact real estate investing? I think a lot of people get hung up on things like rent control, that can feel really problematic from a real estate investing standpoint. But this seems like an area of regulation where as there’s allowances made, and a push for some creative use on spaces, this can be really positive for real estate investors, particularly if you’re looking at a house that has an easy duplex conversion to it. I would imagine with your with your realtor hat on you could you could see how the value could shift pretty quickly. 

Nate Hedrick  13:25

It is market specific, though, right? I’m just thinking of one of the markets that I invest in where the single family houses are much more popular than the duplexes. And in this particular neighborhood, there are a lot of both, right. They’re all over the place. And they’re mixed in you might have a single family four bedroom right next to a triplex, right. And they’re all mixed in. And so what I think is interesting is that you have to kind of do the math on it, right? So if that if it’s a four bedroom, and it would rent for $2,000 a month, let’s say again, Midwest prices. Four bedroom/$2,000 a month, and you convert it into two two bedrooms, it might rent for, let’s say it’s $900 or even $1,000 a month basically break even, even if it’s slightly above that, let’s say it’s $1,100 a month for two two bedrooms. That’s an extra you know, $200 bucks a month but it costs you a whole bunch of money to make that conversion happen, it may not be worthwhile. Now if that math changes and if you go hey,  it’s $2,000 a month for a four bedroom or it’s $1,600 a month for a two bedroom and I can split into two two bedrooms will shoot now now we’re talking about very different numbers and it might be worthwhile. So it’s it’s going to be market dependent and location specific especially with zoning which kind of mentioned already, but also with price point. Does the rent shakeout and make it worthwhile? 

David Bright  14:45

That’s a very good point. And a lot of that math, you know, that’s one of the things that pharmacists love to dig into in a to spreadsheet, right? So it’s easy to do that math and sit down and figure out okay, rent for two units. How much is that compared to rent for the one unit And then you can factor against that, what are the costs of converting that property. Some properties are going to be a lot easier to convert than others. So for instance, that four bedroom house, if that’s a four bedroom ranch with one bathroom and one kitchen, that might be a little more difficult. If it’s a two bed, two bath, with two bedrooms downstairs, two bedrooms upstairs, a bathroom on the first floor, bathroom on the second floor, maybe there’s a second floor laundry on the second floor that can be converted into a small kitchen, it becomes much easier to convert different structures in different ways. And I think from a math standpoint, too, another thing, one of the markets where I invest, if it’s a small multifamily, it’s an expectation of the landlord to take care of the lawn, the snow, the water, the sewer, the trash versus if it’s a single family, the tenant is expected to take care of all those things because it’s their property. So that math can shake out very differently in different markets. And so I think it’s a really good point to think through how that works in your local market. 

Nate Hedrick  16:01

Keep in mind, too, that that’s a lot of work to make those conversions happen, where if you’re really interested in maximizing the value of that property, there might be other strategies you could consider too something like a rent by the room strategy. We’ve talked to other pharmacists on the show in the past about that strategy, where let’s say you only have a four bedroom, one bath situation. But you can take those four bedrooms and rent them out to college students because you’re down the road from a great college. Now all of a sudden, you’re getting the benefits of all of those bedrooms, without having to do any of the extra work. And it’s probably a better use for that property anyway, right? You were gonna have to add a bathroom, and it was going to be a wonky layout and so on. It preserves kind of the intended use of that property without a big conversion, and allows you to kind of convert it for the short term into that student housing example, and then shift it back when you’re ready to sell it, for example. So I think you know, where it feels like you’re running up against too many roadblocks. If you’re considering this strategy, you might actually be running up against too many roadblocks. And it’s time to pivot, you know?

David Bright  17:01

Yeah, absolutely. And that can definitely factor into where you’re looking to buy a house for a strategy like this. And, and just like the geography of are you close to a college or close to some kind of situation where it would be advantageous to rent by the room, you also need to think about some of these rules and regulations and a lot of communities have limits on number of unrelated persons that can be in a single property, right? 

Nate Hedrick  17:26

There’s unrelated persons rules, there’s also maximum occupancy rules. You can’t just push this to all limits, like you have to be following the local ordinances and regulations and zoning. That’s a bad way to get burned quickly.

David Bright  17:40

Yeah, there’s even one market where I invest has a number of square foot per room, per occupant, so this seven by ten room, you could only if you were renting by the room, that’s a one occupant situation. It would have to be a bigger bedroom, if you wanted multiple people that were on the lease for that room if you’re renting by the room. So it can get really complex in a hurry as you jumped to some of these strategies. And it’s very important to do your homework before you start leasing things out like that.

Nate Hedrick  18:09

Yeah. All right. So David, so now that you’re cramming all these people into this one house, they’re going to need a place to store their stuff, right. So let’s, let’s talk self storage for a second. This is a space that I’ve always found really interesting. I drive past enough self storage places to kind of wonder, and I’ve heard crazy stories of people converting, you know, old warehouses into a self storage unit and making a killing. So talk to us about that kind of conversion. 

David Bright  18:32

At some point, we really need to do a whole episode on self storage, because this is just a unique animal for investing. And there’s a lot of different considerations. You know, some people jump up and down and say how great it is to not have tenants and toilets and all these issues that you’re just renting out essentially a garage that a lot of people are going to visit once a year, and just keep paying the bill. And it just makes it really, really simple. And folks just seem to love their junk and love paying a lot of money to store their junk, right. So there’s definitely something there. As far as at least in my neck of the woods where it gets very, very cold, some people prefer a climate controlled self storage as well, depending on what you’re storing. You know, if you’re storing a camper or boat or something like that some people prefer climate controlled, even for just general storage. Some people prefer that. And particularly in those instances, if you already have some sort of building that has climate control to it, then there may be a opportunity to convert that so a lot of old storefronts, old warehouses, things like that, if that’s just no longer a viable use for that structure, converting it into self storage could be a play.

Nate Hedrick  19:47

Or even if you’ve got, you know, half the property that can be converted into controlled temperature and the other half is just open warehouse space. Right? You could do half and half where people that don’t need controls, controlled temperature. Great. These are the units for you. They’re cheaper. And those that do, pay a premium for these, these better units, for example. So, yeah, I think the self storage space is super interesting. And it’s even like, similar to like a parking situation, right like RV parking, you could expand to that. I mean, there’s so many different avenues within that, that are similar to that self storage space that I think are fascinating. 

David Bright  20:19

And in the in the self storage space, also, I think those of us that work in the single family or small multifamily space, there may also be a play to take a garage for a property like that, and then rent out the garage separately, there’s some people that really just don’t value that and they don’t really care if there’s a garage, and other people would love to rent out the garage, they don’t have to go rent a storage unit somewhere else. And so that can be another way, if that’s typical in your market, to make sure that you’re you’re maximizing, and you’re looking at the revenue potential of a property, as would be common in that market. Right? If it’s not typical to pay extra for a garage, you’re probably not gonna be able to get away with that. But that could be a factor depending on where you’re investing. 

Nate Hedrick  21:03

You just mentioned something that I think is a term that we kind of throw around, but it’s worth worth exploring is that the highest and best use for a property right? What is the highest and best use for a particular property. And I think sometimes, like you said, it might be looking at doing self storage, or it might be, you know, all the things we’ve been talking about. But but more and more with the problem of affordable, effective housing, I think people are looking at buildings and saying maybe the highest, most effective use of this building is to put units and give people a great place to stay. So let’s kind of wrap up here, maybe with the discussion on apartment conversion, because again, that’s going to be our next our structure of next episode. 

David Bright  21:43

I think this is a big one, because you’re right, affordable housing is in short supply. And there’s a lot of particularly office building right now, where people that are making the conversion to work from home, companies may not need all the office space that they once had. And so there are office buildings that are are just sitting vacant. And so there is one just in the news in Michigan that I saw just this week, where someone is making a proposal to buy a gigantic office building and convert it to based on the purchase price, I can only imagine more luxury kind of apartments, not necessarily affordable housing. But that can a downtown tower kind of luxury apartments set up may help to solve some of the there’s nowhere to rent, and we have vacant office buildings. So I think that could be one play for helping that kind of problem. And finding that highest and best use for a structure in a new economy.

Nate Hedrick  22:40

We have one of those going on in downtown Cleveland right now. It’s right outside the baseball stadium, it was an old junky office and like the downstairs, the all the all the ground level tenants are all like bars and restaurants. And then everything up was just kind of crappy office that nobody was using. And it’s an awesome location. It’s like right in the center of downtown, right by the baseball stadium, right by the nightlife. And so a big company bought it up, and they’re converting it into like 200 smaller apartments, that are going to be a great place for somebody to live in, start out. And I think I think it’s a great project. The issue is, if you’re going to do that you’ve really got to pay attention to zoning. Right. I think right now, it’s very favorable. A lot of communities are interested in at least exploring that, especially if they have a housing problem, finding more housing, but I think that there’s going to be times where there’s pushback, and you just can’t get that use conversion to kick in. So it really needs to start with the zoning and regulation side because money can fix just about anything in terms of a conversion project. But it can’t change voters minds and regulations. If if they’re going to draw a line in the sand and say you can’t put an apartment here, you know? 

David Bright  23:46

Because one of the similar opportunities that I’ve seen is a school building that may have been shut down and no longer in use. But a school building particularly a lot of classrooms that may have like I’m thinking of an elementary school room where there may even be a bathroom attached to the classroom, there may be a sink for like washing your hands after the art project and things like that. So if there’s already some of those things in there, it might be simple enough to convert that little sink area to a kitchen that the bathroom is already a bathroom is there a way to add a shower and then suddenly you’ve got some small, affordable studio style apartments out of an old school and so there’s there’s been some in my area where I’ve seen projects like that take place as well and particularly if the school is in otherwise decent shape, like it has a decent roof, windows, some of those things. It may not be a completely unfeasible conversion project to help with affordable housing. But you’re right that’s the school is generally not zoned for residential large scale multifamily. So yeah, there are definitely some regulatory hurdles that you have to get through, but yeah, that pitch could definitely be made.

David Bright  24:54

Yeah. And I’ve learned through this process, too, that there can be things that may not otherwise jump out to you. Like when I walk through a hotel, I don’t necessarily think about whether there’s the sprinkler system in that room or not, right. But different jurisdictions may have different regulations and requirements on what it takes to have a long term occupancy certificate versus a short term. And with the nuance there, it’s important to pay attention to those local rules and figure out, you know, it may actually be really hard to convert that even though it makes sense that it’s a place where you go and you stay overnight. And you could stay over more nights if it’s your long term residents, but it would seem logical, but sometimes there are there are other hurdles in that process. So yeah, again, super important to pay attention to the rules in cases like this.

Nate Hedrick  24:54

And I think that’s why, and Alex will talk about this next week in our episode all about hotel to apartment conversion. So I think that’s why he initially targeted this space is because it’s such an easy from a construction standpoint, like everything’s already there, right? It’s designed to be a place where people go to sleep, have a bathroom, like it’s already kind of set up that way. We’re just taking it one step further and making a long term livable solution. So I think you’re right, looking at zoning, looking at the regulations is important, but also the construction side of it, too. Like, if it’s halfway there already, this is a great way to kind of kick it the extra step down the road, and all of a sudden, it’s an apartment. 

Nate Hedrick  26:18

Yeah. Well, hopefully that gives you guys some flavor as to how property use conversions work. Like I said, next week, or next episode, we’re going to have Alex Cartwright back on the show talk all about the hotel to the apartment conversion that we are going through right now. And some of the details surrounding that. It’s it’s been a pretty fun project, so I won’t spoil it. I’ll save it all for next episode. But again, this will give you some background going into that one. And again, we’ll see you guys soon.

David Bright  26:47

Thanks for listening to the YFP Real Estate Investing Podcast. If you like what you heard in today’s show, please leave us a review or subscribe to the show so you never miss an episode. If you have a question know someone that would make a good guest or want to connect with us head on over to YFPrealestate.com and join the growing YFP Real Estate Investing Facebook group. 

Nate Hedrick  27:05

[DISCLAIMER] As we conclude this week’s episode of the YFP Real Estate Investing Podcast, an important reminder that the content of this podcast is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in this podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with their financial advisor with respect to any investment. Furthermore, the information contained in our archive newsletters, blog posts and podcasts is not updated and therefore may not be accurate at the time you listen to it. Opinions and analyses expressed herein are solely those of Your Financial Pharmacist unless otherwise noted and constitute judgments as of the dates is published. Such information may contain forward looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

David Bright  27:59

Thank you for your support of the YFP Real Estate Investing Podcast. Have a great rest of your week.

[END]

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