How to convert single family to office rental or boarding house

Rental Property Investor from Charlotte, NC
posted about 2 years ago

Hoping to tap BP wisdom. I found an historic 6 bedroom house that seems like a good candidate to convert to small office rental space or a boarding house. What do I need to consider? How do I estimate possible rents and demand? What would be my responsibility regarding cleaning the common spaces, managing personalities (possible tenant conflicts), etc.? I live 10 miles away.

Facts below:

About the house: 100 years old. ~4,000 sf on 1/3 acre lot. Sits close to the road, which leaves ample space for parking behind. Six bedrooms. 3-1/2 bathrooms. Two story. Huge windows, wood floors, 10-foot ceilings, wide hallways, shared kitchen.

Zoning: Already zoned as "town center commercial," which allows boarding houses and office conversions.

Location: Located in a vibrant small town that's up and coming. Walkable to a dozen restaurants (2-6 blocks), and grocery store (6 blocks). Several other houses within 2-3 blocks have converted to offices. One houses a law firm (entire building). Another houses a mix of several small businesses (small office rental space). Hospital (120 beds) within 5 miles. Community college within 6 miles. Approximately 25 miles from downtown Charlotte.

About the rooms:

1. (First floor) Approx. 12x14 room with private bath and separate outside entrance, plus interior entrance to kitchen.
2. (First floor) Two rooms separated by french doors. Total space approx. 15 x 40. Separate outside entrance, plus interior access to kitchen and shared bathroom (on first floor).
3. (First floor) Approx. 12x14 room with separate outside entrance, plus interior access to kitchen and shared bathroom (on first floor).
4. (Second floor) Approx. 12x12 room. Shared bathroom (on second floor). Access from interior staircase.
5. (Second floor) Approx. 10x11 room. Shared bathroom (on second floor). Access from interior staircase.
6. (Second floor) Approx. 14x14 room with large private bath. Access from interior staircase.

The house requires some updating, but those costs are easy for me to estimate. Bigger question is how to know if this would be viable for small offices or by-the-room rentals. Short-term rentals (AirBnb) isn't allowed.

One of the tenants in the multi-office house around the corner said their rents run $400 to $600 a month for separate offices that are about 250-350 square feet. I haven't come across room rental rates (yet).

What do you think is the highest and best use for this property? Which would give me the fewest headaches? How can I assess supply and demand?

Thanks!

Comments

  • Boarding house seems better to me. But you could give it a try at the rental office. About your small town specification, I agree with you there. Back in the UK, I lived in a small town where I enjoyed working from home there. I moved up to Pennsylvania and am renting an office space in center city philadelphia. When I was preparing, a lot of suggestions got on my back. Most of them said to look upon the internet. It's a 50/50 chance thing, and I wouldn't run to rent the first office I see.
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