When I first sit down in the office with a duplex buyer, one of the first questions I ask is, “What are your goals in buying a duplex?”
For investors, the answer may be a certain rate of return; for most, that is defined as a specified percentage of cash on cash return. If the investor rehabs properties, her goal may be for a certain profit margin.
For most owner occupants, the goal is to find a nice, comfortable place to live, with their portion of the mortgage payment not to exceed a specific dollar amount.
Much of the time, I’m able to find a property that meets these main objectives in a relatively short amount of time.
But what I find, time and again, is when I do, clients come down with an acute case of “Analysis Paralysis”. They get so bogged down in the minutia of the numbers that they fail to act. And while they’re analyzing, somebody else buys the property.
Almost always, the numbers they’re crunching, or criteria they’re evaluating, aren’t in keeping with the information provided in our initial meeting.
This usually has to do with suddenly wanting to make a lower contribution to the mortgage payment, or no longer being “willing to do work” . Sometimes, buyers decide they want the property for a greater discount; even though it’s already on the market for 30 – 60 percent less than what it sold for three years ago.
What do I attribute this to?
Fear that they could have gotten “a better deal”, fear of failure, and, just as often, fear of success.
Fear is an acronym for False Evidence Appearing Real. We’ve all read and heard the headlines about people who overextended themselves in the real estate boom. But what we need to remember is that far more people have successfully survived the duplex buying process, and done so profitably and happily.
I want my clients to be happy. I get a rush when they get a good value and a chance to make money. However, there is no way they can make money at all until they buy.
There hasn’t been a crash in real estate values like this since the Great Depression. When that crisis ended, property increased in value for well over 70 consecutive years.
We won’t see this again in our lifetimes. So if a property hits all of your original goals and needs, has there ever been a better time to buy?