One of the things that’s difficult about buying duplex foreclosures is there’s no one there paying rent.
With no established rental income, and usually, no previous owner to ask, how do you determine how much rent the duplex will generate?
I wish I had a complicated, scientific answer. But I’m afraid when it comes to rent, it’s as easy as Craigslist.
Scan the ads. Try to find a unit that’s comparable to the one you either own or are considering in a similar location. Make sure too it’s got comparable utility obligations. In other words, if the landlord pays the heat in one, make sure she does so in the other as well.
If possible, find a unit that has a similar number of bedrooms, also in a duplex.
When you can’t, simply take the number of bedrooms and divide them into the amount of rent being asked. For example, if a two bedroom unit is renting for $900, that’s $450 per bedroom.
Try to see if there’s an average amount in the area; is that what all of the units are renting for per bedroom?
If so, multiply that number by the number of bedrooms in your duplex. For example, in this instance, a three bedroom would probably rent for $1350. Two identical units, then, would generate $2700 a month.
This same practice works to determine whether you’re at market rent for any units you already own.
Sure wish it was more complicated than that. But sometimes, the best ideas are the easy ones.