Comments Off on A Duplex Investor’s Moment of Truth
I spent much of my weekend doing the final cleaning on a rental property.
I have been working on it in earnest for three months. And as I thought about the amount of effort and money I’ve recently sunk into the place, I remembered that as great as rental property investment is, there are also times when it’s a lot of work.
This was one of those times.
If you’re new to investing, or are thinking about becoming a rental property owner, stories you hear from more experienced investors may be all glory or all horror.
Investment property ownership can be a little bit of both.
It’s wonderful that for little more the cost of a down payment, tenants will help you contribute substantially to your personal wealth or retirement account.
In exchange, every now and then, you’re going to either find yourself picking up after them or paying someone else to do it.
I have had many tenants who have left rental units in such great shape that all I had to do for the next resident was change the lock.
And I have had others who’ve let their pets destroy woodwork, not cleaned toilets for their entire residency, and left a household full of broken furniture behind.
Great tenant screening goes a long way toward solving these problems. But sometimes, life deals even the best person a blow and as a result, their habits and their standards change.
Everything worthwhile in life requires some effort.
Including rental property.
Comments Off on Before You Buy Your First Duplex
If you’ve been renting for several years, you may be starting to think it would actually improve your budget if you bought a duplex, instead of renting one.
So now what?
The first thing you’ll need to do, if you haven’t already, is save enough for a down payment. Depending on where you live, this may be as little as 3 percent of the purchase price of the duplex. In some locations, there may also be down payment assistance available.
You will also need to have money in reserves for things like closing costs, property insurance and a home inspection.
Talking with a good lender who is familiar with duplexes early in the process is also important. He or she can help determine the amount you’ll need to save, as well as help you repair any issues that may appear on your credit report.
If you are in the market to owner occupy a small multifamily property, it is extremely important you make sure the loan officer is very clear on that, and that he or she has verified with the financial institution the required down payment for the loan program.
Buyers often come in and tell me their lender has approved them for a 5 or 10 percent down conventional mortgage. In those instances, I advise my client to double check. Those loans are available for single family purchases, but I currently do not know of a comparable program for multifamily properties.
Next, you should try to meet with a Realtor who specializes in investment property. How do you know? You may see their name on duplexes you’ve seen for sale or (hint), read their blog.
A duplex specialist will educate you on how to calculate what your portion of the payment will be, as well as be able to advise you as to any local licensing requirements you may face.
An experienced Realtor will also help you determine your short and long term goals. For example, sometimes the neighborhood you want to live in isn’t the location that will provide the greatest cash flow.
If you want more information about the duplex buying process, be sure to download my Duplex Buyer’s Guide or send me a note.
I’d be glad to help you out.
Comments Off on Minneapolis Among Top Rental Markets
It’s a great time to be a landlord.
According to the recently released All Property Management‘s Rental Ranking Report for the first quarter of 2015, the U.S. home ownership rate is at its lowest rate in 20 years.
This has caused vacancy rates to fall and rents to rise, making rental property a great investment.
The Report considered factors like area vacancy rates, rent variance, capitalization rate, property appreciation, job growth, the average number of days it takes for a property to sell, job and rental availability and the costs of taxes and insurance.
When the numbers were crunched, Minneapolis and St Paul were named the top market in the Midwest to own rental property, and one of the top 5 in the nation overall.
The Twin Cities saw rents rise an average of 5.36 percent over last year, an average of just 43 days on market for a property to sell and a metro wide vacancy rate of 4.4 percent, which is just over half the national average.
Prices and rents have risen dramatically in the metro over the last few years; making it a great time to buy or sell a duplex, triplex or fourplex.