I just received this info from a realtor and I have not done multi family yet but I do know it is accessed differently. Working to research now but thought I would provide the details and see if there was any advice on how I can make sure I review all items needed to come up with the best purchase price. They do not have one so I will need to go over all the details to make an offer based on info I can get from the seller.
"My client has a 2 unit multi-family home
4BR/3BA and 2BR/1.5BA
The unit is fully occupied collecting $2000, but could earn more.
Seller is flexible and motivated. She was living on one side and decided it was all too much for her.
Accepting all offers
Close to schools
Less than 1/2 mile to groceries, shopping and restaurants
Close to emergency services
2 minutes to Park
Large yard for families with small children
On a quiet street
New water Heaters
New water supply line
New Cabinets and countertops
All Appliances stay
One tenant is on a month to month the other is on a year lease"
- I will research rental prices for the area
- I need rental rolls from seller correct??
Thanks for any advice!
Updated 8 months ago
Price they would like to sell for is $215k but it is more about reviewing the facts for a MF correct? Make offer based on actual numbers?? Thanks
I’m new to investing and new to the site so take my advice for what it’s worth. I recently purchased a duplex this past summer so I’m starting to learn on the fly along with the help of the podcasts.
For many of the expenses you can estimate based on a percentage as found in the BP calculators. Obviously you will want to know something about the condition of the property i.e. what repairs are needed. It would appear that they have recently done some repairs so that is a good start. When you have an inspection done you can always renegotiate if something major is found. My place is almost 100 years old so there was plenty in the inspection that wasn’t a necessity to have repaired. Don’t let that scare you away as it almost did me.
You should find the taxes on the county assessors website. This with any repairs and an idea of what other similar duplexes have sold for should put you in a good position to put in a competitive offer.
I don’t personally think rent roll is necessary on a duplex especially when the owner was living on one side. Again I’m fairly new to the process so maybe someone would have a different opinion.
@Tim Varner Thank you for replying to my post! It is so great to get to all learn together. and that makes sense about maybe not need the rent roll on a duplex. I am gathering my info now including taxes. If I went by the rental rule of 50% and it rents for $2000 per month now (and if I think that could continue), their list price of $215k is not even 1%...thats why i was wondering if I should look at it differently or lowball them lol. Didn't want to lowball if the duplex should be considered differently than the SF homes. Thanks again for your reply- new or not, it was very helpful!
Hello @Kelly Kormos One of the most important things to consider is the loan you will be using (or if you are paying cash). Depending on the financing you use the numbers will be significantly different. I am also curious if you are planning on keeping the current tenants or moving into one of the units to secure a FHA loan to house hack a little bit.
Although making sure you aren't spending more than market value for the property is important but making sure the numbers work out is more important. Bigger pockets has some great tools to help you calculate the cap rate for a duplex. You should definitely receive the rent roll from the seller. Other than that schedule a time to see the home. You will need to give significant notice because of the tenants but you will definitely want to check out the interior before putting in an offer. Or make your offer contingent on interior inspection. Also walk around the neighborhood a little bit and determine what kind of renters are likely to live there.
@Jacob Wathen Thank you! yes I will be financing more than likely especially if not enough work needed to allow me to refi my cash back out. Also, I will not be living there. I am more than happy to keep current tenants if have a solid payment history. (if the rent they are paying is not too much lower than market value). They are taking offers contingent on viewing property...just found out they pay flood insurance on the property so not sure I want to get in to that....lots to think about!!
@Kelly Kormos don't get too scared by the flood insurance! Just factor it into your numbers and if it doesn't pan out then move on to the next one.
@Kelly Kormos , check out my blog post “Purchasing Our First Duplex”. Happy to help you further analyze the deal but a couple of questions I saw:
- Analyzing 1-4 units are similar, so treat it like a SFR.
- discount or ignore the “could earn more” statement by the realtor. If they could, they would and if you can, that’s just icing on the cake.
- Remember the 1-2% rule is a baseline, starting point. Also consider it a sliding scale. The higher the #, typically equals worse neighborhood.
- Does the rent price include utilities, lawn care, etc?
- What is the taxable property value now? If less than the $215k or agreed upon purchase price, taxes will go up. Will need to factor that in.
PM the address and I’ll give you some feedback but ultimately I know nothing about your market. :)
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@Jay Helms this is very helpful!! I will send you the MLS link to see if anything else pops out to you! I can analyze if like a SF but just asking the right questions and looking at the property more as an investor than owner occupied is where I need to improve my skills. I truly appreciate your time helping me learn.
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