Should I sell as a package to an investor or individually ?

7 Replies

Hello all, I own a half duplex that I currently rent out. Also has a garage that I rent separately. I am in the process of trying to buy the other half (older person, house needs a rehab). I am thinking about selling the both when I buy and rehab the other side. Would I be better to market it as an investment, both sides each would rent for $1100/mo and garage is $125/mo. Or try to sell them individual to owner/occupants. The side with the garage would go for approx $100k, other side a little less (no garage but newer siding,boiler). Possible investor deal at around $170k for both? Income would be $2300/mo. Thanks!

@Matt M.  Think: who is going to buy the property? In my area, a duplex is a solid investment and is attractive to a young person as a first purchase to own and live in. It is also preferable to someone wanting both units as an investment property.  But in California, where prices are steep, diving the property is the best way to make it affordable.

Is it a condo? Townhouse? Does each unit have a different parcel number? Okay, this is getting detailed but the title must be clean and appropriate to have a successful sale. To sell as two separate units, legal work may need to be completed.

Why do I bring this up? Because one needs to know everything in order to get the best return on the investment. As a contractor, you are bringing in the sweat equity, but maybe not the legal aspects.  Market it the best way to NOT take a haircut. What will your costs be to improve the building to a marketable condition, add profit, transaction costs to sell the property, and see which options will market the best.

@Kathy Henley When I say duplex, I mean a half double. It’s two single family houses connected. I own one side. No legalities involved. If/when I buy the other half it’s it’s own separate entity. I currently have good positive cash flow from the side I own, I paid $23k, $14k rehab. I rent the house and garage for a total of $1205/month. The other side would be a bit more to purchase, with about the same if not a little more to rehab. I’m just thinking the two together would be a solid turnkey investment for someone, rather than trying to sell them individually which could take a lot more time
@Matt M. I suggest keeping your options open. Since the other unit is already independent, you can sell it all independently to different buyers. Or if somebody wants them all together, sell them as a "portfolio". Let the buyer worry over the legals of connecting them into a single property *after* the sale, if that's what they prefer.
@Alvin Sylvain There’s really no reason for anyone to put them on one deed. I’m just wondering if bundling them together at a cheaper price would bring a quicker sale, or possibly making $15-20k more is worth holding them longer selling individually

@Matt M. I find myself thinking through similar things on properties I own. Generally, you will make much more money by selling a single unit to a first-time homeowner using some type of government financing. The downside is, it takes longer and they want every little thing fixed. I recently had a buyer ask me to 'inspect the air ducts to see i they needed cleaning' for instance. 

This is a bit of a personal question. If you can put up with the BS of selling to a first-time retail seller than you should absolutely do that because it is more profit.

If you can get a great deal on the other side, do so but not with the intent to put them together because that will make them worth less not more.

By the way, why sell at all? Seems like a smoking deal if you paid $37k and rent for $1205/month. If you need cash to expand just keep it and borrow some money on it. Just don't get greedy an borrow to much. Make sure the rents easily cover the debt service.

@Jeff Kehl It totally was an amazing deal. House was listed for $23,100, but was a Hudson & Marshal auction. Listing realtor didn’t have the lockbox code so no one could get in. I won the house at $21k, then they came back at $23,100 or no deal. Not sure how that’s legal without a reserve, but whatever. I got in to see the house and laughed. Took me $14k and 1.5 mos to get it done. Looking to possibly sell only to fund a flip. Or do I keep it and rent both sides if/when I buy the other half. That side will cost me a little more, the numbers will definitely work, just not as good as my current cash cow.