The High Cost Of Waiting To Buy A Minneapolis Duplex

Have you ever tried to save yourself a little bit of money and it ended up costing you a lot?

I have.

And I think of that often when I work with first time Minneapolis duplex, triplex or fourplex buyers who find themselves overcome with fear.

In my experience, this typically manifests as finding reasons not to buy a property. Ordinary and apparent repair issues with a prospective property become overblown or perceived as insurmountable.  No matter the duplex, its location, or price, it’s never quite right, resulting in months or even years of looking for a property and not buying one.

Of course, then there’s the whole phenomenon of waiting for the market or interest rates to fall to historically low numbers; which may not be seen for a half a century.

In most cases, all this occurs while a prospective buyer continues to pay rent to someone else.

And it’s that someone else who’s made all the money the buyer “saved” by not overcoming their fear.

I recently worked with a buyer who had been looking for property on and off for nearly a decade. In between showing duplexes, I started to wonder how much money had been lost by waiting to buy.

Had this client bought a duplex for $425,000 all those years ago, by now they would have:

• Been able to take advantage of $41,87.73 in depreciation on their tax return. Or half that if the duplex was owner occupied.
• Paid down $50,984.44 of the mortgage.
• Gained $82,309 in appreciation.

All in, the principal reduction and increased value alone would have put $133,293 in equity in the buyer’s pocket, while the depreciation would have greatly reduced their tax obligations. To receive the same amount of economic value lost by waiting, Twin Cities duplex values would need to drop 31.4%.

That’s nearly Great Recession levels of property decline. For the record, that kind of drop in property values happened once in 80 years.

Think of how much the buyer will lose if they wait 8 decades?

If you’re thinking of buying a Minneapolis, St Paul or Twin Cities area duplex, give me a call. I’d be happy to help you make money instead of losing it.