A week ago I put a south Minneapolis duplex on the market. Two days later, the seller had ten offers.
So it’s true. It is a seller’s market for Minneapolis and St Paul duplex owners. That’s great news if you’re a seller; bad news if you’re a buyer.
In multiple offer situations, buyers are, for all intents and purposes, entering an auction. And while it’s frustrating to have to pay more than you initially intended on a property, it’s important to keep things in perspective. Raising your offer by $1000, $5000, $15,000 or even $25,000 is a lot of money, the fact is, if you break down, it really isn’t so painful.
A $5000 increase on a 30 year fixed loan, at 4.64 percent interest comes out to a $25 a month increase in your payment. If there are two of you, that means simply staying home to eat rather than going out one night a month.
An bid of $25,000 more translates to $125 more a month in payment. That may mean not going out to eat at all or, as many are doing, cutting out your cable bill and opting for a streaming television service instead.
Remember, while you may not be able to deduct all of the increased interest you pay on the higher loan amount, a percentage of it still is tax deductible.
More importantly, however, an investment property is an asset. It puts money in your pocket every month. Cable, on the other hand, is a liability. It takes money out of your pocket.
And at the end of your investing career, it’s the assets you’ll be most glad you paid for.