No matter how long I work in the real estate investment and duplex sales, I am always surprised by duplex sellers who want to price their property according to “what they’ve got into it”.
They’ll say things to me like, “Well, I paid $300,000 for it ten years ago, and I put new boilers in last year. That cost $12,000. And I put a roof on the year before that, which was another $7500. And I’ve gotta pay the Realtors, and, well, I’d like to put a little something in my pocket…so adding it all up, I guess I’d want $375,000.”
Duplex pricing just doesn’t work like that.
After all, when’s the last time you bought a duplex without a roof? What’s a duplex worth that doesn’t have a source of heat?
Pricing a duplex according to what you’ve got into it is a little like replacing the alternator on your car and tacking the cost on to whatever the value is according to the Kelly Blue Book.
You would just never do such a thing.
After all, the Blue Book values are determined by what the market has been willing to pay for cars comparable to yours.
It’s assumed all of those vehicles came with things like alternators, transmissions and tires.
Kind of like duplex values (unless a condemned or seriously distressed property) are determined by similar properties in the neighborhood that have sold– and included the cost of shingles and heat.
A duplex isn’t worth what you’ve got into it.
It’s worth what the market says it is.