Looking at a duplex priced about $30,000 under market but it’s a 2BR lower and 1BR upper in Milwaukee, WI. Not sure if I️ should shy away from smaller duplexes with only 1BR in one of the units. Is there a rule of thumb or anything besides the cash flow analysis that I️ should be considering? Thanks!
@Derek Mizysak - There are tons of people who rent one bedrooms. Think about couples that don't need the extra room, young professionals, grad students, divorcees. In one of my multi I have a one bedroom, it was very easy to rent.
But look at your local market, look at Zillow, Tulia and Craigslist for one bedroom rentals. What do they look like, how long have they been marketed. This will let you see how many other one bedrooms are for rent and their quality. Know your local market and competition. But generally I don't worry about renting a one bedroom.
Thanks for the reply. This place is 3 blocks from my current 3/3 duplex rental so I️ know the market well. Was just making sure there was no “rule of thumb” to consider when buying duplexes. Thanks again!
Where is your prospect located Derek? I lived in MKE for a total of about 25 years. Cheap properties there, especially if you really know the areas and pockets! Remember Brewers Hill about 20 years ago? Wouldn't step foot over there back then, but now, you CAN'T get in unless you're a millionaire!
But agreed, a lot of single folks or young couples will rent that upper (I bet it's a bungalow, or a cape cod, right?).
Just make sure you tenant screen correctly. I'd avoid renting to any perspective tenants if they have 2 adults with 2 children or more or more than 2 adults. Just more wear and tear on the unit and the tenant maybe not able to afford a 2 bedroom. Find your right balance and what works for you.
A single person or older couple probably would want to be in the upper unit in that situation. They would love for the family with the child to be in the lower unit!
Great, thanks guys!
We just purchased a 2/1 duplex on the south side for a fix and flip but we foresee neither have problems selling it nor rented it. Nice and clean units are in high demand throughout Milwaukee.
@Derek Mizysak Although there is no rule of thumb. Run your numbers and if it makes sense go get it!!! an equity position going in is always preferred and it sounds like you have that covered. I'd be interested in knowing what the cap rate it on a deal like this. Also whether it is off market on did you find it on MLS? All the best to you!
Hi @Shawn Ackerman , this deal has a cash on cash return of 20% running conservative estimates with a cap rate of 8%. This was an MLS property but the price was lowered quite a bit this month. Kinda helps it's 4 blocks from my current duplex so I know the area very well. I submitted an official offer yesterday, waiting to hear back by tomorrow!
Also, big shout out to @Pat Parrillo for the assistance on this one. Really helped me feel comfortable that I was submitting an air tight offer, thanks again!