Archive for April, 2012

Comments Off on Why A 2013 Duplex Short Sale Could Increase Your Taxes

duplex debt forgivenessIf you’re considering doing a short sale on your Minneapolis duplex, waiting too much longer could increase your taxes.

Under the Morgage Debt Relief Act of 2007, debt forgiven that was incurred to buy, build or substantially improve an owner-occupied duplex may be excluded from taxable income if the duplex owner meets specific criteria.

This exclusion expries December 31, 2012, unless the bill gets extended. With improving economic news, this may not be as likely as it once was.

In order to meet the December 31 deadline, a duplex seller must have received, accepted, and negotiated an offer with a buyer that the lender or lenders agreed to.

As this process and take 4-6 months, duplex sellers will need to have their properties listed for sale no later than the middle of May.


Happy Duplex News Ignores Something

said on April 5th, 2012 categorized under: Selling A Duplex

Comments Off on Happy Duplex News Ignores Something

duplexes for saleWith all of the recent happy headlines it would be easy to think it won’t be long before we return to the Minneapolis duplex values we saw in 2005 and 2006.

After all, didn’t we just get news that February’s foreclosure starts were down 15 percent from January, and 19 percent from the year before?

But I have to tell you about the elephant in the room.

Distressed properties were more than one-third of all duplex and housing sales in the nation last year.

And you can’t tell me the 7.57 percent of all borrowers who are delinquent on their mortgage payments magically received loan modifications in one month’s time.

Fact of the matter is, for whatever reason, the banks are not letting their backlog of duplex inventory (over 200 by my estimation in Minneapolis alone) hit the market. And, they don’t seem to be picking up the pace on foreclosing on delinquent duplex owners…at all.

Everybody in the real estate industry was waiting for a spring tidal wave of foreclosures hitting the market. For whatever reason, it hasn’t come.

Meanwhile, traditional sellers are waiting for exotic values to return before putting their Minneapolis duplexes up for sale; which won’t happen until everybody who wants a job has one, the backlog of foreclosures has cleared, and banks begin lending to more borrowers.

So, if you’re a duplex owner who’s just ready to be done, there’s going to be a competition gap the next several months. Demand is high, and you may well be able to optimize your property’s value – because nobody else appears to be selling.

After all, sooner or later the banks are going to have to either decide to become landlords, forgive all debts, or sell.

My money’s on the latter.

Minneapolis Duplex Sellers Shake Off The Rust

said on April 3rd, 2012 categorized under: Twin Cities Real Est

Comments Off on Minneapolis Duplex Sellers Shake Off The Rust

sandblasting the rust off minneapolis duplexes for saleIt’s been so long since I had this kind of news that I actually had to sandblast off the rust in order to be able to type the next sentence…

The number of new duplex, triplex and four unit listings  that came on the Minneapolis and St Paul market the week ending March 24, 2012,  were up 35.5 percent over the same week the year before.

For the duplex buyers in the market, that’s very good news.

Of these new listings, 45 percent of these duplexes are being offered for sale by traditional sellers. In other words, they are not foreclosures or short sales. This represents a 5 percent market share increase over the same week in 2011.

Minneapolis and St Paul duplex sales were also up; though at an 11 percent increase, nowhere near as dramatically.

Forty percent of the duplex sellers who accepted offers were people with equity in their property. Last year, just 22.2 percent of the sellers took checks from the closing.

As of yet, prices aren’t up. In fact, with an average off market list price of $145,728,  and sellers, on average accepting offers at 90.6 percent of list, in all likelihood when these duplex sales close, values will be down from the $142,937 for the week in 2011.

The amount of new inventory in the single family home market dropped 2.2 percent for the week. Meanwhile, pending sales were up a whopping 30.2 percent. In all, the amount of single family home inventory is down 27.3 percent.

Comments Off on Duplex Investments Surge In 2011

duplex investorAccording to the National Association of Realtors (NAR), sales of investment properties jumped in 2011 to the highest levels since 2005.

Last week, NAR released their annual report, 2012 Investment and Vacation Home Buyers Survey, which covers existing and new-home transactions for 2011.

The study shows investment property homes and duplex sales jumped 64.5 percent to 1.23 million. This is nearly doubly the 749,000 that sold in 2010.

In fact, investment property sales were responsible for 27 percent of all real estate transactions last year.

Perhaps this is because 41 percent of all investment buyers purchased more than one property.

Of these investors, 49 percent paid cash in 2011. Half of all investment properties they bought in 2011 were distressed; meaning they were either bank owned or a bank was involved in the negotiations.

For those duplex investors who financed their acquisitions, the median down payment was 27 percent.

How much were investors spending? The median investment property purchase price was $100,000 in 2011. This is up 6.4 percent from the $94,000 seen in 2010.

On average, the typical investment property buyer last year had a median age of 50, earned $86,100 and bought a duplex or other investment property that was, on average, 25 miles from where they lived.

Thirty percent of all single family, duplex, triplex and apartment building investors lived more than 100 miles from the property.

The share of property investors who were in the market to rehab and sell for a profit stood at 5 percent. While this is an increase from the 2 percent market share in 2010, most investment buyers intend to own the property for a median of 5 years. This is down from the 10 year expected ownership period seen among 2010 investors.

Of all the real estate investors, 34 percent did so with the intention of diversifying their investment portfolio or saw it as a good opportunity. Half did so with the intention of generating rental income.

Fourteen percent of real estate property investors bought so they could provide housing for a family member, friend or relative.

Nearly half of all real estate investors said they will buy another property in the next two years.

As there are nearly 42.1 million people in the country ages 50-59, another 43.5 million between 40 and 49, and another 40.2 million in the 30-39 age range, it looks like the investment property market is positioned to stay strong for years to come.

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