One of the benefits that go along with owning rental property is the ability to be creative with how you increase the return on your investment. Splitting properties in half and selling them as individual parcels is beginning to become popular. I did some research over the weekend and decided to write about what I’ve learned.
Can you sell half a duplex? Yes, you can sell half of a duplex, this has become the norm in the industry. Each unit must be split into separate parcels and there’re a series of steps that are required by the zoning office to fully complete the process.
Separating a duplex can be a long process there are many property requirements required to complete the process. Continue reading below to find out what some of the requirements are.
Why Is The Splitting of Duplexes Becoming So Popular?
As I browse the housing platforms to look at properties for sale, I’m noticing more and more duplex’s being split up and sold as individual parcels. Selling 1/2 of a duplex is starting to gain popularity and here’s why:
- Investors Paradise
- Rising home prices
- Gives home buyers and alternative
- Home-buyers can buy in premium locations at a lower price point
Investors Paraidise
In markets like California home prices increase at a very rapid pace; according to Zillow, last year the average home prices increased by 4.4%.
So, splitting duplexes has become an investor’s dream in high appreciation markets like California.
You’re able to potentially increase your return if you choose to split a property down the middle and sell them as individual homes. This method entices home buyers and investors to pursue properties with this strategy in mind.
Rising home prices
Certain markets are at an all-time high, and it makes it difficult for people to achieve the American dream. People are willing to buy less of a house for a fraction of the price that it cost to purchase a single-family home. This is a better option for the millennial seeking homeownership.
Lower home price
According to Zillow, the average home price in Los Angeles is $752,508, and the current value of our property is $600,00. Being that it is a duplex if I decided to sell half; the amount I could sell it for would be somewhere around 300k.
This presents home-buyers with an incredible opportunity to get involved in real-estate at a much lower entry point.
What Is The Process of Splitting A Duplex?
The splitting of a duplex isn’t a completed process, the hardest part is making sure all of the state and county regulations are followed.
Following The Subdivision Law In California
If ever you decide to make an improvement to your land which has buildings in place or un-improve the property. Let’s say your only planning on selling a portion of your land; subdivision laws must come into place and must be followed.
Subdivision law “refers to the selling or leasing of land with intent to subdivide a portion of the property into separate parcels for the point of sale, lease, or financing.
What Are The Legal Restrictions On Subdiving A Property In California?
There are several legal restrictions set into place for subdividing a duplex such as:
- Checking the deed for subdividing restrictions
- Checking with the state/county on subdividing within your area
There are times when a deed may have restrictions on subdividing the property, this can be found once title report is pulled. If your duplex is under such restrictions then it may be possible to remove these restrictions if a real-estate lawyer is hired.
Each zoning area has set requirements for subdividing within a specific zoning ordinance; and in order to complete the process, these guidelines must be met. For instance, one of the common guidelines for splitting a parcel is a certain square footage retirement for each parcel.
If any of the state/county requirements aren’t met then the subdivision of your property will not be possible.
Does Your Property Meet State Law Requirements
If your successful with meeting the requirements above, each lot must have separated utilities (water, sewer, power, and gas). The California Legislative law goes into further detail on examples of general provisions.
Does Your Property Meet The County Requirements For Subdividing
In addition to being approved for the State Law requirements, county requirements are another hurdle to jump over before the process is complete. Each parcel such comply with your county-specific requirements in mind, which may include:
- a minimum set back requirements from the curb
- equal land terrain, (half of the lot cant be a rocky terrain and the other buildable land.
- minimum square footage requirement
If your property doesn’t comply with any of the above, then you may want to consider amending your property. Decreasing the number of parcels will allow for each individual lot to be larger, and make it easier to meet the minimum square footage requirements.
Should You Purchase A Half-duplex?
The real estate market is at an all-time high, this makes it very difficult for people to get involved in owning a home.
In my opinion, creating a long term vision for your real-estate goals is vital to your success. Looking down the road will help you determine if buying half-duplex will work for your future goals. My wife and I purchased several properties during the crash, however, if we were starting from scratch, I would consider purchasing a half-duplex.
Los Angeles is a high value, fast appreciating market. So, if I were presented with an opportunity in a market that has potential for growth. I wouldn’t hesitate to make the purchase. Listed below are the pros and cons of purchasing a duplex or a half-duplex to help aid in your decision:
Duplex
| Pros | Cons |
| Rental Income | Close proximity to neighbors |
| Tax benefits | Less privacy |
| Purchase up to 4 units(FHA loan) | Increased insurance premiums |
| Depretiation | Higher mortgage interest rates |
Half -Duplex
| Pros | Cons |
| Lower barrier of entry | Smaller land parcels |
| Lower maintenance cost (split with the neighbor) | Repairs have to include the other owner if the building is attached |
| Lower insurance premiums | Shared backyard |
| Lower mortgage interest rates | Shared front yard if the building is attached |
Related Questions
Is it hard to sell a duplex?
Typically families prefer a single-family home because of the added privacy, duplexes tend to be louder which may detours home-buyers. Overall they aren’t difficult to sell they just may take a bit longer. However, in today’s market, duplex living has become popular over the years. So, when and if you decide to sell your property it shouldn’t take long before it’s sold.
In Summary
Splitting a duplex and selling them individually is a great way to maximize the return on your property. Although it seems like a simple feat, there are numerous rules that go into place when you decide to subdivide a parcel. The State/County regulations will determine if you’re a good applicant for a subdivision.
Something as simple as not meeting the overall minimum lot size requirement to subdivide a property can prevent you from separating your parcel all together.
The market you’re in will determine if subdividing your parcels and re-selling will be right for you. I’m not set on splitting our duplex and re-selling, but having other options for improving our return on investment is always a benefit.