Archive for September, 2013
Comments Off on Get More Buyers For Your Duplex – Without Spending A Dime
It may come as news to many, but many times, a duplex buyer wants to live in the property they’re purchasing.
And many duplex sellers lose the opportunity to sell their property to these prospective buyers simply because they forgot one simple thing: to put a clause in their lease that requires a tenant to move out in the event a buyer wants to live there.
This eliminates their property from consideration by a large portion of buyers in the marketplace. And it would have cost these sellers little, if anything, to simply use a lease that allowed for an owner to move in given proper notice and, possibly, appropriate compensation.
Perhaps you’re a duplex owner who can’t imagine selling. Maybe you don’t think your duplex is the kind of place any owner would want to live in. But in either case, does it hurt to simply use a lease that gives a buyer that option?
Comments Off on Are Duplex Prices About To Stabilize?
By all accounts, the Minneapolis duplex market is recovering from the real estate crash nicely.
All year, here and elsewhere, there have been reports of increased sales activity and, more importantly, rising prices.
However, we’ve also read these rising prices have been driven largely by low interest rates and a lack of inventory.
Brace yourself: that may be about to change.
Countless duplex owners who have wanted to sell for years have been sitting on the sidelines, waiting for their chance. And many have begun to seize the opportunity.
For the week ending September 14, 2013, for example, there were 34 duplexes, triplexes and fourplexes that became available for sale in the Minneapolis/St Paul market. Most (70.6 percent) belong to traditional sellers.
Compare this to 2012, when there were just 20 new listings for the week, 60 percent of which were sold by owners with equity.
There were 12 small multifamily property owners who accepted offers the second week of September this year; up just one from 2012. However, 83.3 percent of this year’s happy sellers had equity in their properties. Traditional sellers usually translate into higher prices, and the average off market list price for the 2013 crew was $205,900.
Last year, just 27.3 percent of the sellers didn’t involve banks in their decision, and that resulted in an average sold price of $140,659.
The single family home market has also seen a bit of an influx of inventory, with new listings up 19.5 percent for the week. Pending sales were also up, rising 8.3 percent over last year. In all, inventory is still down 8 percent from where it stood one year ago.
As supply begins to rise to meet demand, keep an eye on stabilizing prices, and a subsequent slowing in property appreciation.
Comments Off on Does Housing Affordability Suggests Future Rise In Vacancy Rates?
Guess what? It’s still less expensive to buy a house or a duplex than rent one.
Last week, Trulia released their Summer 2013 Rent vs. Buy Report, which found that nationally, in spite of rising interest rates, owning is 35 percent cheaper than renting. Last year, that number was 45 percent.
If duplex and house prices stayed the same, interest rates would have to slip into double digits– about 10.5 percent- before it made more sense to rent.
Of course, numbers vary somewhat according to where you live. In Honolulu, for example, it is 10 percent cheaper to own than rent, and interest rates would have to rise to just 5.8 percent for that not to be true. In New York, that figure is 7 percent.
Buyers in Minneapolis find buying is 42 percent more affordable than renting, down from 52 percent one year ago. Interest rates would have to top 12.5 percent for it make more sense to be a tenant.
In cities like Detroit, on the other hand, it’s 65 percent less expensive to own than rent. Interest rates would have to rise higher than credit cards– to a staggering 32.8 percent for it to make sense to rent in the Motor City.
Should lending standards relax, duplex owners and income property investors should be on the lookout for higher vacancy rates, as tenants look to not only save money, but reap the rewards of home ownership as well.
Comments Off on Minneapolis Single Family Home Sales Decline
If there’s news to report about the Minneapolis and St Paul duplex market for the week ending September 7, 2013, it actually isn’t about investment properties…
It’s about single family home sales.
And the news is, the number of pending home sales for the week dropped 4.5 percent, which represents the first drop in year-over-year sales in many, many months.
Whether this is a reaction to climbing interest rates, or simply an unusual blip on the radar is yet to be seen.
Minneapolis duplex sales, however, saw a year-over-year increase. There were 18 duplex, triplex and fourplex owners who received and accepted offers during the week; 72.2 percent of these have equity in their properties. On average, these listings left the market at a final list price of $207,978.
Last year during the first week of September, there were just 12 Twin Cities duplex sellers who accepted offers. Even though 83.3 percent of them were equity sellers, their properties averaged a final sales price of just $164,116.7.
However, this rise in average sales price continues to largely be a function of limited inventory. There were 31 new listings for the week in 2012, 48.4 of which belonged to equity sellers. This year, there were just 18 new duplex listings, with 72.2 percent coming from traditional sellers.
With the Federal Reserve’s announcement today of their intention to keep interest rates low, it will be interesting to see what the fall market brings.
Comments Off on Duplex Buyers Pose A Math Question
When a buyer writes an offer on a duplex at its list price but asks the seller to pay their closing costs, is that the equivalent of a full price offer?
Many of my buyers think it is.
But, the reality is, when a seller pays for a buyer’s closing costs, it’s the same as taking money out of the sale to purchase something for the buyer.
True, closing costs and prepaids aren’t the equivalent of a new car or smart TV, but they are expensive. And when a buyer asks a seller to contribute a portion of the purchase price toward things like insurance, recording fees, and so forth, it reduces the amount of money the seller takes home.
For example, an offer of $200,000 with 3 percent in seller paid closing costs, reduces the offer to the seller by 3 percent. In other words, this is the equivalent of an offer of $194,000, which is not a full price offer.
A full price offer, which gets the seller the net they hoped for when they listed the duplex for sale, would be list price plus 3 percent. In the example above, that would be $206,000, from which the seller would designate funds at closing be applied toward the buyers closing costs.
Comments Off on Minneapols And St Paul Duplex Sellers Come Out Of Hiding
If asked to name one thing that’s changing about the Minneapolis and St Paul duplex market, my answer would be inventory.
After a year of it being in short supply, sellers have begun to test the water, and slowly, we’re seeing the number of new listings rise.
For the week ending August 31, 2013, for example, there were 25 new listings, 64 percent of which were brought to the market by equity sellers. While this figure doesn’t blow away last year’s 19 new listings and 36.8 percent traditional sellers during the same time frame, it nonetheless represents roughly a 30 percent increase.
Pending sales for the week told a different tale. There were 16 Twin Cities duplex sellers who received and accepted offers. Most (56.3 percent) were equity sellers. While the average final list price of these properties was a whopping $181,481, it’s important to note the group including a listing at $750,000, which is a rarity. When I remove this transaction, the 15 other properties finished at an average list price of $143,580.
Last year, there were 18 properties that sold during the same week. Fifty percent of these belonged to equity sellers, and they finished at an average sold price of $136,431.
The big news on the single family home front is the Median Sales Price for the month of August was up 16.9 percent over last year to $208,000.
On average, properties are selling for 97 percent of their original list price, largely due to there being just a 3.6 month supply of inventory on the market.
In other words, it’s a sellers market…which may be exactly why we’re seeing more of them.
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It isn’t often Minneapolis-St Paul ranks second for anything in national rankings. But according to a recent report from Reis, a company that tracks real estate information nationally, the Twin Cities is second only to New York for the lowest vacancy rate in the nation.
Reis studied 86 U.S. rental markets and found that while New York had a vacancy rate of just 2 percent, Minneapolis-St. Paul was right behind at just 2.1 percent. Syracuse, NY and New Haven, Conn. are tied with the Twin Cities for second.
When vacancy rates are low, rents usually rise accordingly. However, the study found that while rent rose 3.1 percent from June 2012 to June 2013, it was only the 15th highest increase in the country. Seattle, on the other hand, experienced an annual rent increase of 6.2 percent.
This means there may be room for bigger rent increases in the Minneapolis and St Paul rental markets.
Before duplex owners get too excited and raise rent to crazy, it’s important to remember that low vacancy rates often inspire new construction. And, this is true in Minnesota as well, with Finance and Commerce reporting an estimated 18,683 proposed new apartment units.
And they all get built, vacancy rates will rise. And when vacancy rates rise, landlords are faced with lowering rents and making concessions to attract tenants.
said on September 5th, 2013 categorized under: Tenants
Comments Off on Duplex Owners Should Do One Thing In The Fall
If you own a duplex in a city where it snows, early September is a time you should be thinking about your leases.
As in, are all of your tenants under one?
After all, if your tenants are on a month-to-month lease, they can pick up and move in January. Maybe that’s not a bad thing, but I’ve found it pretty tough to find new tenants any time after Halloween.
Remember, a lease is an agreement between multiple parties. There is no rule that it has to be 6 months or one year in length. It can be as long or as short as the parties involved agree to.
Don’t be afraid to sign a tenant to a 7 month lease to insure you don’t incur a vacancy until spring.
After all, they might be happy to be assured they won’t be facing a rent hike or have to move over the winter too.
Comments Off on Dreams Come True For Minneapolis Duplex Buyers And Sellers
During the last full week of August, both Minneapolis buyers and sellers saw their wishes come true.
After all, prices are up, making sellers happy, as are sales.
As the number of new listings increased, buyers suddenly had more properties to chose from, making them happy too.
So it’s a pretty good time to be a Minneapolis or St Paul duplex seller or buyer.
During the week ending August 24, 2013, 23 Twin Cities duplex owners received and accepted a purchase agreement on their property. Of these, 69.6 percent had equity in their properties. On average, the final off-market list price for these was $215,861.
Last year over the same stretch of time, there were just 12 Minneapolis and St Paul multifamily property sellers who accepted offers. Of these, 75 percent had equity in their properties. The average sold price for these investment properties was $191,162.
Buyers received some good news during the week as well, with 28 new listings coming on the market. The majority of these belonged to equity sellers (67.8 percent).
In 2012, there were 20 new listings for buyers to chose from. Just 8, or 40 percent, were owned by people who either did not have to consult with a bank to sell, or were not a bank.
As we drift more toward the traditional, established routines of fall, let’s hope everyone interested in buying or selling a duplex continues to get their wishes.