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So my plan is to buy one of the lower priced two or three family homes in the Southern Bergen County area so that the rent it generates can go into the mortgage. I would live in the place for a few years, then as I get into a better place career wise, move out and use the place as an investment property.
My question is. If I get a two family home with a finished basement, what's stopping me from renting out both units and keeping the basement for myself?
I'm a young single guy who is almost never home because I'm always at work, or just out in general. All I need is one bedroom, one full bath, and a kitchen, which many of them have. I get the feeling when reading a lot of the listings with finished basements that this is what is happening anyway.
where exactly is the home located? is it in a flood area? because then you dont want to live in the basement. i am not sure it is legal and for mortgage/tax purposes, in order to recieve a rebate etc, you will need to be a resident in the home. i dont know what they will say if you live in the basement and have the rest rented.
Thats very common all over Hudson County and lower Bergen County. Just don't get caught renting the basement because in some towns your violating code and its illegal.
My question is. If I get a two family home with a finished basement, what's stopping me from renting out both units and keeping the basement for myself?
First off, it's a good plan. Many young people aren't thinking about & planning for the future this way. Kudos to you.
Now, as to living in the basement & renting the rest. If you can manage it safely & legally, good for you. But it can be both dangerous and illegal. Call the town and find out the legal limit for the property, as well as the penalty for going beyond what the law allows. Most towns take this fairly seriously, for good reason. Then, ask whether it can be changed. If it can, get the details as to what it will require.
Does the basement have true egress windows? If there's a fire & the stairs are blocked, is there a window through which you can climb to safety? Especially since the furnace, water heater & other home mechanicals are likely down in the basement as well, this is a real concern, not just some technicality. Walkout basements are thus more suited to this sort of arrangement.
Unless the stairs to the basement are right there by the front door, access is going to be difficult. Does the finished basement have private access to outside?
Does the finished basement have heat & AC? Often, they aren't put in when finishing a basement, becasue underground rooms tend to be less succeptible to weather changes, and may be reasonably comfortable as an occasional place to sit & watch TV all year long even without heat & AC. Living there might be different.
My guess is that you can probably do what you are looking to do, but that it may be difficult to find a property taht is suited to the arrangement.
On a related question ,what is the legality of renting a "carriage house" or detached building where the property is zoned 1 family?
Many, perhaps even most, towns in NJ allow that a carriage house, or any sort of guest house on a property zoned for one family, can be used by family members, but cannot be rented out.
I'd only do this if the house wasn't in a flood zone, the basement has a private entrance, there is air condition and heat down there, etc. And if I get a place without a finished basement, but with a private entrance, I'd pay to have the basement finished.
In the house I grew up in, we didn't have a basement. All that stuff like the furnace and hot water heater and stuff was in a boiler room downstairs. No big deal.
In my mind, I could easily just put three mailboxes in the front of the house, A, B, and C. It wouldn't be THAT apparent that I'd be living in a basement as I'm only one person.
like i said before, there may be a financial problem later on. like in order to recieve home rebates, or when you file for taxes, you must prove that you live in the home. if it is done under the radar, you may be considered a non resident of the home and you will be considered an off premises landlord. so i would ask an accountant how that woud work.
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