A client wrote an offer last week on a Fannie Mae owned duplex in south Minneapolis.
His offer was one of eight.
Needless to say, his offer was well above the list price. Hugely above. And he was going to live in it and put 20 percent down.
He lost out…
to a cash offer.
If you want to invest in a Minneapolis duplex, have good credit and a down payment, but don’t have six figures in cash, what should you do?
I’m going to encourage my duplex buyers to look at short sales.
Yes, they require a great deal of patience due to the amount of time it takes lenders to approve the transaction. However, here are five good reasons a short sale duplex is worth the wait:
- The bank looks at one offer at a time- If the seller decides to work with you, you don’t face a bidding war.
- Short sale duplexes are often in better condition than foreclosures- There’s an odd phenomenon that happens to unoccupied property. Somehow, the presence of people in a duplex keeps the plaster on the walls, the plumbing from freezing and windows from breaking. As a result, many short sales do not require an immediate cash infusion for repairs.
- Short sale duplexes come with tenants- Not only does the rental income help you qualify for a mortgage, it also allows you to your ownership of the Minneapolis duplex with an infusion of cash from the damage deposits and pro-rated rents that should have been assigned to you at closing.
- Less competition- By now, we all know of someone who wrote an offer on a short sale, only to wait 9 months for a bank response. Most of the banks have gotten better at processing these files. However, they still do require time. That fact alone helps deter people from making an offer, meaning you’re less likely to experience multiple offers and have a broader selection of inventory to choose from.
- The seller is human- Banks don’t care about anything but their bottom line. There is no reasoning, no arguing a case and, in the case of a foreclosure duplex, no one who can answer questions about the property’s history. With a short sale, most sellers are happy to tell you what year the roof was replaced, where the nearest hardware store is, and warn you about the little quirks most properties seem to have.
I know I’m frustrated with losing out on great duplex investments. And I’m sure my clients are too. That’s why we’re going to be looking at more short sale multi-family properties.