If you’re going down hill, how do you know you’ve reached the bottom?
After you’ve stopped going down.
Trying to guess the bottom of the Minneapolis and St Paul duplex market is a lot like running down a hill.
We will only know we’ve reached the bottom of the market after property values have stopped declining.
It’s tempting, in light of the significant home value declines reported earlier in the week, to decide to sit on the sidelines and wait until we think the market has bottomed out.
And yet, once it has, it will be too late. Prices will already be on their way up.
With Minneapolis and St Paul duplex vacancy rates already below 3%, rents are about to go up. And, as duplex values are driven largely by the amount of rent the property generates, prices are sure to follow.
What’s more, while you’re waiting for the bottom, you’re missing out on all the other benefits of owning a duplex, like positive cash flow, principal paydown and tax savings.
If an investment property is purchased correctly, market value fluctuations don’t impact property owners in quite the same way they do single family home owners.
After all, if your Minneapolis duplex is cash flowing and paying its own way, even if it never goes up again in value (which is unlikely), when your mortgage is paid off, your tenants will have bought you a duplex and supplemented your income for years; regardless of what the real estate market did or didn’t do.