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Updated almost 10 years ago on . Most recent reply

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Zachary Decker
  • Investor
  • Anchorage, AK
0
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2%+50% rule in Anchorage?

Zachary Decker
  • Investor
  • Anchorage, AK
Posted

Hello Anchorage area investors,

I'm making an offer today on a duplex. It's in good shape, cute, in a nice neighborhood and in my price range. After watching the market for the last six months it seems like a good find. It doesn't however meet the 2% rule and barely makes the 60% rule. I understand these are rules of thumb rather than commandments one must follow, but I'm curious whether this is typical in Anchorage or perhaps the duplex isn't as good of a find as it appears on the surface. 

Thanks,

Zak

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Scott Sewell
  • Investor
  • Anchorage AK and Hampton, VA
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Scott Sewell
  • Investor
  • Anchorage AK and Hampton, VA
Replied

Hi Zak,

And welcome to the site. BP is such an awesome resource! 

As to your question: I think the 2% rule for Anchorage is very hard to do, and not critical for success (but does make it much easier!) here as long as you have good, realistic numbers for your expenses. What it can (IMO) do is tell you that a given property as an investment (ie: non owner occupied, 20%-min.-down) could produce a 15-20% ROI.

Which brings me to my first question: Is this strictly an investment or do you plan to occupy?

The 50% rule is much more valuable and critical (again In My Opinion), as we've self managed multi-family property here for the last 8 years and found it to be a fairly accurate predictor of actual expenses, once you include all the things people don't usually think about - Capital expenses, management, marketing, to name but a few.

The numbers you give lead me to believe this is an average (but reasonable) deal for a duplex in Anchorage and the reason it looked good initially is that this is the one of , if not THE, hottest segment of the market right now. This could be a good deal for you, or not, depending on your long term strategies.

Again, welcome! And don't forget to check out the local REI club - Real Estate Exchange or REX for short.

  • Scott Sewell
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