Comments Off on Foreclosure or Short Sale in Your Past? You May Be Able to Buy A Duplex
House wrapped with Foreclosure tape front view
If you lost your home to foreclosure or had no alternative but to do a short sale during the housing crisis that began in 2007, there’s good news. You may be eligible to buy again.
Each type of loan has a waiting period following a financial event that prevents a duplex or home buyer from securing financing prior to the end of that time.
- Bankruptcy – Chapter 7 – To obtain an FHA or VA loan, you must wait two years from the date of the discharge. To obtain a conventional loan, you must wait four years.
- Bankruptcy – Chapter 13 –With permission from the court, you must wait one year for an FHA or VA loan, and two years for a conventional mortgage.
- Foreclosure – Your clock on this starts ticking on the date the deed transferred, not the date of the Sherriff’s Sale. For an FHA loan you must wait three years, the VA requires a waiting period of two years, and you must wait seven years.
- Deed in Lieu – Three years after you transferred your property to the bank, you may obtain an FHA loan. The VA requires a bit less time, at two years. And a conventional loan requires a four year wait.
- Short Sale – From the day you closed on the sale of your property, you must wait three years to obtain an FHA loan, two years for a VA loan, and 4 years to qualify for a conventional loan.
As you begin to consider the possibilities, you may consider that for many, buying and living in one unit of a duplex is a way to hedge against financial uncertainty. Income from the tenants helps offset not only the cost of home ownership, but usually, also reduces the owner occupants cost of living as well.
More often than not, the owner who lives in his or her duplex ends up paying less in “rent” than he or she had when renting from another landlord.
Comments Off on Minneapolis Duplex Tenants May Become Harder To Find
Let’s talk about something we haven’t discussed in a while: vacancy rates.
First, the vacancy rate is the percentage of built units in an area that are currently vacant and for rent.
The keeper of the vacancy rates in Minneapolis and St Paul is a company called Marquette Advisors, who release quarterly reports, which they just did. It’s important to note while their data is not specific to duplexes, triplexes and small apartment buildings, there is generally a correlation between the two.
According to the recently released report, the vacancy report in the first quarter topped 3 percent. The average vacancy rate had been hovering near 2.3 percent for the last five years.
A vacancy rate of 5 percent is considered indicative of a balanced market.
So what does this mean to Minneapolis duplex owners?
That brings up “rent growth”, which is business speak for rent increases.
Rising vacancy rates mean less demand for rental units. This leads to smaller rent increases and, when vacancy rates pass the 5 percent mark, rent concessions from landlords. Think back to “first month free” and “free cable and internet” ads of a decade ago.
Higher vacancy rates mean less cash flow. Less cash flow not only means less money in your pocket, that smaller income stream may contribute to a slowing in the appreciation of the property, and a reduced value when you go to sell it.
With an expected 3900 new market-rate apartments expected to come into the market by year’s end, Marque
tte is predicting the average vacancy rate by year’s end will be somewhere between 3.6 and 3.8 percent, and rise above 4 percent next year.
Rent gains are expected to be moderate this year as well, with increases in the 2.5 – 3 percent range.
None of this means, of course, that the sky is falling. It’s just a subtle shift in the market to bear in mind as you make decisions about improving your property, leasing it, or perhaps, even selling it.
It remains a duplex sellers market in Minneapolis and St Paul. If you are considering selling, it may be a great time to do so.