New Duplex in Alaska

12 Replies

Good Evening All,

I'm pretty new to this forum but i've read up on quite a few posts... My question is should I wait or buy now ... I'm looking at duplex's in Anchorage AK. My wife and I are in the military and I am tired of wasting our housing allowance on renting. The problem is, most duplex's up here at the moment are going for $480k-530k. Thats kinda steep and a little discouraging for a new investor. The bright side is you can rent it out for $2k - 2.5k. pretty comfortably. We are using the VA loan so we don't have to worry about PMI but that also means we are putting 0 down.

Do you guys/gals think this is a trap and I should be careful or keep digging? The Cap rate if I was living in it looks to be around 6.7% and if I move out and rent both units it jumps up to 11.1%. The payment would be roughly $3.3k a month. They are newer duplexes so repair costs would be minimal and the house is still under warranty. 

Thank you for the advise!

J. Hastings

If you can go fourplex, do it!

If you are trying to find the middle ground, duplex isn't bad. It is much better than starting out as a SFH with a VA loan.

Good news is, you still have an FHA loan to play around with after living at your property for a year.

James Cash, Real Estate Agent in AK (#18690)
907-360-7448

Thanks for the reply!

I've been checking rental incomes and the range I have been estimating seems accurate enough. I think the low end would be 2k/month. At the end of that 1300 a month out of my pocket is still 400 more than i'm paying. So all in all do you think 515k is too much to spend? Seems super high to me but like I said the numbers seem to check out.

Four plex's seem nice but all in all from what I can tell I make about the same in rent for that price range. Rental income for a 4 plex that cost around 515 seems to be around 1200-1400 each.

You know how it is getting in your first house haha, just have to get the courage to pull the trigger.

J. Hastings

@Jesse Hastings , welcome to the community! 

I've got a nice duplex in the Turpin area near JBER that's been fantastic to own as a rental. @James Cash is correct that the rent/value ratio isn't quite as good as a fourplex, but it should also be considered that the $2000/mo crowd is a much different market than the @1200/mo tenant pool. There's also been more new construction of townhouse style duplex units in recent years compared to triplexes and fourplexes, so there's more opportunities particularly if you're not looking for a rehab project.  

Feel free to get in touch, I'd be happy to share what I've learned over the past 5+ years in the Anchorage area.    

@Jesse Hastings , Welcome to BP! I am guessing your are Active Duty Military also, which means that you will likely only spend a few yrs or so in the area. I suggest searching duplex triplex or 4plex to buy that brings or will bring you great income if you rent out all units. I suggest using your Va loan & living in 1 unit. Get some experience managing the property and when you move decide if you want a property manager to handle it or not. After a 3-5 yrs you should start to build equity into the property & after 5 yrs you should be able to take out a HELOC to use for your nxt home purchase while still keeping & renting the property in Alaska.

Here's a new one for ya.....

We just got back from our house hunting trip in Anchorage and we have no problem qualifying and we're planning on doing the FHA route on a multi BUT we can't seem to find anything that's in decent condition that each flows. The inventory or lack there of seems to be our greatest obstacle. Any advice or inside scoop info any ones willing to share??

I have been looking into investing into a four plex for some time now yet I keep hearing Alaska is going into a recession due to the oil prices dropping & that I should wait. What do you all think? Is it worth waiting till the end of 2016 instead of the beginning? 

we certainly have some low oil price exposure, and the state budget may face more cuts this year and near term, so short term it is hard to say.. Longer term, one has to like the notion that the 50 billion permanent fund may be the stabilizing force, with some sort of use of excess earnings or endowment formula to put a backstop in price drops......I see a few local condo prices lowering and days on market look longer here (all anecdotal) but your fourplex may depend on the local rental market, and if that softens, maybe you can find  a deal in the next couple of years and with a ten year plus time line and positive cash flow it may work well if you can hold through the low oil price cycle...best of luck

Originally posted by @Michael Boyer :

we certainly have some low oil price exposure, and the state budget may face more cuts this year and near term, so short term it is hard to say.. Longer term, one has to like the notion that the 50 billion permanent fund may be the stabilizing force, with some sort of use of excess earnings or endowment formula to put a backstop in price drops......I see a few local condo prices lowering and days on market look longer here (all anecdotal) but your fourplex may depend on the local rental market, and if that softens, maybe you can find  a deal in the next couple of years and with a ten year plus time line and positive cash flow it may work well if you can hold through the low oil price cycle...best of luck

would you think new construction in matsu would be a bad idea?

hi rob, I don't do new construction, and it may not be an ideal time in the cycle (but who can say, perhaps there is a Mideast conflict and 100 a barrel oil in couple of years about when you complete and rent it out)...I will send you an old friends name who manages those in that exact area by message. He may have a pulse on rentals and even other ideas....Best of luck...

Originally posted by @Michael Boyer :

hi rob, I don't do new construction, and it may not be an ideal time in the cycle (but who can say, perhaps there is a Mideast conflict and 100 a barrel oil in couple of years about when you complete and rent it out)...I will send you an old friends name who manages those in that exact area by message. He may have a pulse on rentals and even other ideas....Best of luck...

 thanks buddy, best of luck to you too!

Whether property prices will drop or not with the drop in the oil price is the big question for all of the real estate investors here in AK now.  As far as I have seen working in the oilfield up, there has definitely been some major budget cuts and layoffs in the oilfield for the slope and things will likely be pretty slow next year.  This will eventually trickle down to the rest of since our state government gets 90% of it's revenue from oil.  So, considering that, it seems to me that there is a chance that property values could start to decrease next year, but as @Michael Boyer said, anything could happen that may bring the oil price back up in a year or two, so this is all speculative.  We'll just have to wait and see and be ready to buy if the prices do drop!  Good question @Rob King .  

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