Archive for the 'Buying A Duplex' Category

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duplex vs single family investmentIf you’re thinking of investing in real estate for the first time, you might be wondering what kind of property is “the best”.

Is a duplex better than a single family home? An apartment building better than a condo?

The answer is, all of them are good  provided that they cash flow. As a buyer, however, you must also be aware of what your tolerances are.

There are many advantages to single family home investment.

First, in most instances, as part of your lease you are generally able to have the tenants pay for all of the utility bills (including water), as well as perform lawn care and snow removal duties.

Of course, if the tenants neglect those projects, the property may incur city fines, and you’ll end up performing the duties anyway. And, should the tenants neglect to pay the water bill, you will be stuck with it as the property owner.

Another advantage to investing in single family homes is should you choose to sell, you will have the broadest pool of potential buyers. This should allow for a relatively quick and easy exit strategy, should you need one.

One of the downsides of single family property investment, however, is when you have a vacancy, you are 100 percent vacant. As in no money coming in and you have to pay all the bills out of your own pocket.

You may also be faced with having to come up with a greater down payment to buy the home in the first place, as you are required to owner occupy for at least the first year if you choose to use FHA financing.

You may, however, use FHA financing to buy a duplex, triplex or four unit apartment building; becoming an investor and an owner occupant at the same time.

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Are You Licensed To Own A Minneapolis Duplex?

said on April 16th, 2012 categorized under: Buying A Duplex

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Application for duplex rental licenseWhen you buy a Minneapolis duplex, one of the expenses you need to plan for is a rental license.

The cost of the rental license itself is reasonable; $69 for the first unit and $19 for each additional unit. And, if you close on your Minneapolis duplex after April 1, that fee is reduced by half.

However, when a licensed rental property changes hands, you must also budget for a change of ownership inspection and the fee that goes with it, which is $450.00.

The city inspection is done to ensure the property is in compliance with minimum housing standards.

All single family properties previously used as rentals, duplex, triplex and rental properties containing up to four units are required to have rental licenses.

This is true even if the duplex’s owner lives in one of the units.

Exceptions to a change of ownership inspection include condominium and townhouse properties with more than 6 units, properties that have had a rental license inspection within the last six months, or single family dwellings that are homesteaded by a relative.

Remember, operating a rental without a license can result in a fine of $500, as well as any other inspection, license fees, and fines for not posting a 311 poster ($200.00 if not displayed in a common area for tenants to see).

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hamp-logoUntil now, it’s been difficult for upside down duplex investors to get the government-backed loan modifications available to owned-occupied duplexes and single family homes.

In late January, however, the Obama administration announced an expansion of the HAMP program to allow investors to qualify.

According to a report in Bloomberg News, Timothy Massad, the Treasury’s assistant secretary for financial security said starting in May, landlords can use the Home Affordable Modification Program (HAMP)  for up to four loan workouts, as long as they rent out each property or have plans to fill them.

The federally-subsidized program pays banks to cut interest rates, lengthen the terms or forgive some of the mortgage principal.

The theory behind the change in policy is keeping current owners in place prevents tenants from being evicted. Massad said, “Vacant properties are a problem no matter how they became vacant.”

Almost one in every four home purchases in January were investment or vacation properties.

It is estimated that about 700,000 landlords will be eligible to modify their mortgages.

Minneapolis Duplexes Sell In Twos

said on March 8th, 2012 categorized under: Buying A Duplex

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minneapolis duplex sales up two percentFor the first time in ages, there were more new Minneapolis and St Paul duplex, triplex and four-plex listings that came on the market for the week ending February 25, 2012, than there were the same week one year ago.

Granted, there were only two more duplexes for sale year-over-year, but after months of shrinking inventory, those two were like two inches of rain in a desert.

Minneapolis and St Paul duplex sellers with equity made a significant contribution to the number of new duplex investment opportunities, bringing 45 percent of the new listings to the market.

One year ago, equity duplex sellers pitched in just 31 percent of the market inventory.

For the most part, however, the number two seemed to be a theme, as there were also two more Minneapolis duplex sellers who received offers on their property than there were for the week in 2011.

Of the twenty three Twin Cities duplex owners who signed purchase agreements on their properties during the week, 26 percent were traditional selelrs with equity in their properties. This represents a slight increase of– you guessed it, 2 percent in distressed duplex market share.

Like the Minneapolis duplex market, the single family home sector saw a slight increase in inventory as well, rising 1.2 percent from the same week in 2011.

This increase of inventory, however, won’t be enough to compensate for the 49.5 percent jump in pending sales for the week, which helped the total number of homes for sale on the market drop 23.5 percent.

As we continue to get improving economic and  jobs reports, let’s hope we also continue to get encouraging real estate news.

Comments Off on Why Your Realtor Won’t Show You 50 Minneapolis Duplexes

linden hills duplexMany duplex buyers want to see every duplex for sale in Minneapolis.

Even if the first one they see on the first day they go out looking for duplexes with me is the best one they’ve seen all day, they don’t feel like they’ve seen enough.

This is ironic, especially in the age of the Internet. After all, don’t we all sit at home in our pajamas looking online at duplexes for sale, scrolling through the pictures, and deciding which ones we don’t want to see?

Part of my job as a Realtor who specializes in duplexes is to know the market. That includes both existing and coming inventory well. And it also includes offering counsel as to what is a good buy.

When I sit down and visit with a duplex buyer for the first time and ask questions, I mentally eliminating properties that won’t work for them, based on the information they give me.

For example, if a duplex buyer tells me she’s willing to do cosmetic work to a property, such as painting or stripping wallpaper, I mentally discard the duplexes for sale that I know need more extensive rehabilitation.

If my client says they like built-in buffets and woodwork, I focus my attention on the Craftsman era duplexes where those characteristics are found, rather than the 1960’s side by side duplexes which don’t include them.

And if my client needs three bedrooms in each unit, there really isn’t a point in showing them duplexes with two.

In other words, I don’t show buyers properties that don’t suit they’re needs.

When you work with a duplex specialist, especially one with years of experience, not only will that Realtor help you find a great duplex that’s also a good buy, but more importantly, they will save you time.

And that’s the one thing none of us can never get back.

Duplex Foreclosure Data Makes You Dizzy

said on February 22nd, 2012 categorized under: Buying A Duplex

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duplex sales make you dizzyReading news about the duplex and single family home sales makes my head spin.

Today alone I read the following headlines:

“Overdue Mortgages Number 6,082,000”.

“Report Reveals Delinquency and Foreclosure rates Down for 4th Quarter”.

“January Homes Sales Up Again”, which was immediately followed by “Experts Respond to January Homes Sales Report”.

It makes it difficult to know what, exactly, is going on in the market.

Having read all four articles, I can tell you this:

Last month, total foreclosure inventory was 4.15 percent. This was up 1.1 percent over December 2011, but just 0.1 percent lower than it was in January of 2011. (In other words, we haven’t gained much ground over 2011).

There were 2,084,000 properties counted as part of last month’s national foreclosure inventory.

This figure does not include the 3,9998,000 properties with mortgages more than 30 days late. Of these, 1,772,000 nationally are more than 90 days late with their mortgage payments (but have yet to be foreclosed on.)

Data from RealtyTrac shows a slight increase in foreclosure filings in January, which may mean banks are starting to process foreclosures.

Yes, single family, duplex, triplex and four unit building sales were up in January.

However, 35 percent of these sales were distressed properties — either short sales or foreclosures. This market share is up from 32 percent in December, but down from 37 percent in January 2011.

Of the 4.57 million one to four unit properties that sold in January, 31 percent of them sold for cash.

In other words, it’s likely investors were responsible for nearly one-third of all real estate sales in January.

Perhaps the best summary of all came from the Mortgage Bankers Association. Their chief economist, Jay Brinkman, said we are about halfway to the pre-recession days.

Yes, things are getting better…and, we still have a ways to go.

When Buyers Like The Same Duplex

said on January 19th, 2012 categorized under: Buying A Duplex

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Equals signWhen I work with a duplex buyer, one of the things I require is that they agree to give me the exclusive right to represent them.

After all, I work hard to find my clients great duplexes to buy; both on and off the Multiple Listing Service (MLS).

And if I’m willing to put all of that work in, I want to be sure that buyer isn’t going to bring some other Realtor in at the last moment who will get paid for my efforts.

When I discuss the terms of the exclusive representation contract is that the buyer understand I have other potential buyers I may be working with, and it’s possible that some or all of  those clients might be interested in the same properties.

In the decade I’ve been a licensed Realtor, I’ve shown many duplexes to multiple clients. Believe it or not, it is extremely rare that more than one buyer has been interested in the same property at the same time.

Every now and then, however, it happens. Especially if a duplex is a very good deal.

When it does, I am honest with both parties. I give both my opinion of market value on a property, and what terms I believe the seller might be willing to accept.

I never disclose the amount of one buyer’s offer to the other.

In fact, if one or both buyers are uncomfortable with the situation, I even offer the services of another Realtor in my office who has experience in investment property.

This agent helps the duplex buyer fill out the price and terms of their offer, and, if the client wishes, either sends the offer to the listing agent or presents it in person. This agent represents the buyer only for this period of time, and if the offer is either accepted or rejected, I step back in as their Realtor.

I do my very best to treat everyone fairly and equally.  I want everybody to get a great deal on a duplex, and change their financial future forever!

Comments Off on Why Some Duplex Foreclosures Need Professional Help

repainting a duplexLast night, I was reminded why I think HGTV bears some of the responsibility for the current duplex market.

My clients and I went back for a second showing of a bank owned duplex where the previous home owner had clearly undertaken some do-it-yourself home renovations.

Trouble was, he didn’t know what he was doing.

Oh, the refinished hardwood floors and exposed brick chimney looked really cool.

Unfortunately, however, the homeowner also forgot to install a heat source on the third floor.

The kitchen cabinets looked good too. I just wish that duplex owner had also bought glass for the broken windows instead of using masking tape.

Fortunately, my clients were wise enough to invite a FHA 203k approved contractor along to the showing so that they could get an accurate and professional opinion of what repairs were going to cost them; before they put in an offer.

After all, if the cost of rehabbing the duplex, when added to the cost of purchasing it, was more than the finished property would be worth in today’s market, they would find themselves upside down once they were finished with the repairs. Just like the previous homeowner.

When you’re looking at buying a duplex that needs either a little or a lot of work, it’s  important to remember that big repairs and improvements aren’t as easy as they appear on HGTV.

If you’re considering using a FHA 203k loan to finance those repairs, it’s not a bad idea to get one of their approved contractors to give you a professional opinion before you even put ink on a page.

There are always unexpected surprises and expenses, that can leave you frustrated and broke. And if you’re ambitious enough to take that kind of work on, you also deserve to be compensated for your time and energy in the form of equity.

Remember to build all of those expenses into your thinking when you write an offer to buy a duplex.

Why Is That Duplex Still For Sale If It’s Already Sold?

said on January 11th, 2012 categorized under: Buying A Duplex

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duplex for saleIf you’re looking to buy a duplex, chances are you’ve looked at a few on the Internet.

Odds are also pretty good that you’ve stumbled into a duplex listing or two that were on the web so long and were such good deals that you simply had to call the listing agent to see when you could get in to see it.

At that point, you learned it already had an accepted offer on it.

So why, then, was it still on the Internet?

When someone writes an offer on a duplex, they usually do so with a couple of contingencies. In other words, they are offering to buy the duplex provided a couple of things happen.

They may make their offer contingent on conducting a home inspection, and determining that the property’s mechanical condition is satisfactory to them.

If it isn’t, then their purchase is also contingent on coming to terms with the seller about how to remedy any health and safety imperfections they find in the property.

Unless the buyer is paying cash, the purchase may also be contingent on the buyer’s ability to qualify for a loan, as well as the duplex’s ability to appraise for a value equal to or greater than the price the buyer and seller have agreed on.

However, in this market, the duplex seller may also have a contingency. For example, if the duplex is worth less than the amount they owe their lender, they must make the sale contingent upon their ability to come to a reasonable settlement with the bank.

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Comments Off on Duplex Mortgage Delinqencies Increase, Improve In Minnesota

deliinquent duplex mortgagesAmidst the noise of the holidays, Lender Processing Services (LPS) somewhat quietly issued a news release detailing performance statistics about the 40 million mortgage loans their company helps service.

Perhaps they did so deliberately, as much of the data their report contained wasn’t necessarily cause for celebration.

A full 8.15 percent of their 40 million loans, which represents 3,260,000 mortgages were 30 days or more past due, but not yet in foreclosure.

This figure, while down 9.6 percent from the year before, nonetheless represented an increase of 2.7 percent over November.

According to LPS, they have mortgages on 4,144,000 properties that are 30 or more days past due, but not in foreclosure. Of these, 1,809,000 are actually 90 or more days delinquent, but not yet in foreclosure.

Their inventory of properties in foreclosure but still in the pre-sale process, stands at 2,116,000.

In all, they report they have 6,260,000 properties with mortgages that are 30 days or more delinquent or in foreclosure.

The states with the highest number of contributers to this mess are Florida, Nevada, Mississippi, New Jersey and Illinois. Those with the least are Alaska, Montana, North Dakota, South Dakota and Wyoming.

Minnesota foreclosure numbers actually appear to be improving according the report. In fact, the number of non-current mortgages they service in Minnesota dropped 12.9 percent year-over-year, with 7.9 percent in all not being current.

Looks like we have a ways to go before this is all over.