After a decade of duplex fixer-upper foreclosures and short sales on the Minneapolis and St Paul market, it’s easy to forget that not every duplex rehab involves a hammer and a paintbrush.
Sometimes increasing the value of an investment property simply requires 20 minutes of your time, a Word document or Quickbooks.
Most established landlords hate turning a unit over. When one tenant moves out, it requires a great deal of time, effort and materials to freshen up paint, clean or replace carpeting, run ads for tenants, and then screen applicants. All of this effort and money also means the unit is vacant, which costs an owner income.
As a result, many duplex owners decide they would rather charge a resident less than market rent as an incentive to stay in a unit. A lot less.
When one of these owners decides to sell, an inexperienced investor may see their property listed for sale and immediately decide it isn’t worth looking at because it doesn’t cash flow. The truth of the matter, however, is that the rents just need to be raised.
Most tenants know how much market rent is. Simply giving them notice that their rent is going up to an amount just slightly below the market average is unlikely to cause them to leave. After all, moving costs money and they are still getting a deal.
And with something as simple as a letter to a long-term resident, a new Minneapolis duplex owner can turn a property with little to no cash flow into a cash machine.