Dallas-Fort Worth Real Estate Investor Club

Anyone with experience buying duplexes?

  • 27 Jul 2012 1:01 AM
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    Message # 1020982
    Deleted user
    I am looking at a couple of duplexes...I've walked the properties. Now time to make my calculations, so wondering if there is a different 'formula' to use when considering the numbers and making offers...I've got 2 recently sold very similar comps in same area. Also, one is a short sale. 
    I know the short sale process can take longer (60-90 days) as opposed to SFH which closes average 30-45 days. And I've got some other info. from my agent to go by. Trying to compare apples with apples...

    Anyone who has experience with multi-family props (duplexes)? 
    Short sales? Procedure? Want to brief me? (I need to move fast, so not much time to take a full subject course). lol 
    Just basic particulars; important things to know, pitfalls, etc. I would greatly appreciate someone's help. 
    Thanks in advance! ~Kat
    Last modified: 27 Jul 2012 1:02 AM | Deleted user
  • 28 Jul 2012 5:56 AM
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    Reply # 1024419 on 1020982
    Deleted user
    1/2 duplex (one side) or whole? 
    What part of town?
    What price? etc.

    Bring this up in class later today and we can better help you.

    -Greg

    Greg Wilson
    The REI Mentor
  • 28 Jul 2012 3:26 PM
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    Reply # 1024657 on 1020982
    Deleted user
    Deal #1: 2 FULL OLDER duplexes (2 side by side units, 4 total units, next door to each other/adjoining land). 
    This is a short sale because the owner is over leveraged. Both fully occupied by long term tenants (5/10+ years).
    My agent has experience with short sales' packages.

    Deal #2: 2 FULL NEW duplexes (2 side by side units, 4 total units, side by side adjoining parcels). 
    Turns out these are foreclosures. They've had an offer on only ONE, but prefer to the units sell together. 
    Two units are leased. Third one has a new lease and they're currently qualifying the 4th tenant.

    I can figure the numbers. The area needs multi-family housing!
    What do I need to see from the landlords' as far as rent roll history, paperwork, info. on improvements, etc.?
    And what is the proper terminology called? Thanx!

    PS. Wasn't able to make the meeting today... :(
  • 28 Jul 2012 3:29 PM
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    Reply # 1024661 on 1020982
    Deleted user
    PS. I wouldn't purchase half of a unit personally...Although, I see a lot of this going on...seller's not selling FULL units, as condos, I suppose. Mine are full units.
  • 02 Aug 2012 7:55 AM
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    Reply # 1028553 on 1020982
    Jesus Galaviz

    I don't think there's a different formula for evaluating duplexes versus single-family homes.  If anything, you actually have less risk with duplexes than SFHs because it's more unlikely that you'll have 100% vacancy at a given time.  Some investors/landlords/etc think that multi-family unit renters are less reliable than SFH renters, but you won't have unusual levels of trouble with your renters if you just screen them properly.

    Double-check the neighborhood you're buying in so that you don't get stuck in a rough neighborhood.  Good tenants in a bad neighborhood tend to vacate unexpectedly.  It may be an overly-simple method, but if I want to know how good/bad a neighborhood is, I look at the lawns.  If the lawns are dirt and filled with junk, it's probably a bad neighborhood.  The external condition of the houses is also a useful indicator.

    You may or may not be able to get much info on the current tenants.  Most sellers won't divulge their tenants income (probably the most important thing to know), life circumstances, etc. due to privacy concerns.  Try to talk to the tenants yourself to get a sense of who they are and how the neighborhood is.  See how they react when you tell them that you recently did some evictions on your non-paying tenants.

    Similarly, if you do buy a duplex with pre-existing tenants, you may have to evict them if they're not living up to their lease terms.  Factor in a few thousand dollars of rehab expense PER SIDE to account for this risk.
  • 03 Aug 2012 12:11 AM
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    Reply # 1035540 on 1020982
    Deleted user
    Thank you for your input, Jesus! 
    I am told that the owner is in default due to old age and severe illness...tenants were very timely w/their rents. 
    Unfortunately, HE wasn't paying on the loan. Both are short sales pkg. deal. 

    I have met the tenants: one 81 y/o, sweet women, tenant for 10 years (who doesn't plan on moving she said-LOL) 
    another is a family w/small kids (but stated she was 'running out of room')...another single man has been there 8 yrs. and the 4th has been there 3 years. They are all currently month-to-month. I believe they maintain their own yards. ––I suppose I will have to RE-qualify them? Or evict them...

    The neighborhood is a quiet, small town environment located just off the main road. There are colleges nearby. 
    Also, there are 2 brand new FULL duplexes located to the north of these 2 properties (next door, same street) along with others in the vicinity. 
    I think I am able to freshen them up to suit new prospective tenants!
    One duplex has been updated with tile throughout, carpet in the other one (which I plan to match tile). 
    There are minor repairs: soffit rot, 2 bathroom sinks, window screens,  a "sticky" door & paint. I would like to put up carports additionally, since the parking is in front, side by side. And, maybe a 4' fence in the future. We'll see...
    I plan to raise rents accordingly for any new/future tenants because current rents are on the low end.
    Will be getting estimates for improvements this week...

    PS. My agent told me today the bank approved/dropped the price and I haven't even made an offer! ~Good news!
    Last modified: 03 Aug 2012 12:14 AM | Deleted user
  • 09 Aug 2012 1:43 PM
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    Reply # 1043029 on 1020982
    Terry Lekies
    Its great you received all the feedback on your questions.   I own 2 duplexes (4 units) and have found them a better fit for my investment plans vs. SFH, others may have different experiences.

    I also followed your thread on the mentors.  Greg's advice was spot-on.  I would add that doing the legwork and adhering to the 100 house rule makes a huge difference.

    If you wish to talk more I have a group of comp properties in west FW I watch for buying opportunities and/or market conditions.  This may give you a street level idea of going prices, rents, etc.  Call me 817-280-9791
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