How long did it take you to find your first duplex?

59 Replies

Hello everyone,
I have been searching for a duplex in Philadelphia, PA. for the past 4-5 months. My plan is to purchase w/ an FHA loan (will use 203k if needed), occupy one unit and rent out the other. I haven't been counting, but I'd say I have looked at about 20+ Duplex's so far. The market is tight here in Philly, especially for my $160k buying limit, I haven't been seeing much in my price range that fits what I am looking for. I have put in a few offers and have been outbid by cash buyers.. people are snatching properties up right now! I have been looking on Zillow, realtor.com, Keller Williams, google searches, etc. I am interested to know how long it has taken others in a similar market and it'll be great to get feedback from others using a FHA loan.

It really comes down to your price range. There are not MANY duplexes in that price category. Since you also are limited to having an FHA loan, it really does not make your offer appealing to sellers. Your only hope would be to offer above asking, and being one the the first people to look at the property. That means keeping your eye on realtor.com/zillow everyday. I noticed setting notifications on these sites can still be delayed by a day.

Also if you were to put in an offer at 170k, this does not mean you can't renegotiate down depending on inspections :). I am acquiring a duplex, offered 172k and after inspections I went back down to 150k. Best of luck!

If you keep looking at 10-15 duplex’s a month, then you will find something soon. Just make sure you have your finances lined up and you are ready to make an offer. Also think about contacting different brokers and let them know your an interested buyer. Good luck!

Last year we put in 6-8 offers, full price, most of them all cash and didn't get anything until our realtor got us an off-market deal. In fact one of the properties we were looking at ended up with 35 offers on it.

I think the thing is to just be patient. Don't chase, there are some crazy offers out there, and even if you get the house under contract, it has to appraise. Very very often many of these properties wont appraise for the agreed upon price, so the financing falls apart.

@Anthony Zayas yeah I'm noticing that a lot of sellers aren't accepting FHA, so now I am considering switching up my game plan a bit & going w/ a conventional loan.
and thanks a lot for that insight about offering higher and renegotiating after the inspection! I will definitely keep that in mind. 
Btw, how are you purchasing your duplex? FHA, conventional, or cash? 

See if you can find a real estate agent who focuses on investors and has access to local wholesalers, thats probably going to be your best bet in that price range. The only issue there is that most of the properties are going to want cash, hard money, or conventional loans. To make your offers more appealing I would 100% switch from FHA to conventional. Also try putting up a higher earnest deposit. This is a tough market for sure.

Originally posted by @Erica Gordon :

@Brendan Markle  I am definitely considering switching to conventional and I will look into getting another agent that focuses on investors! Thanks a lot for the helpful info Brendan 

 Conventional is going to require a higher down payment, FYI.

I was doing what you are about 10 years ago. It took me a year to find the property I ended up buying.

The market is more competitive now, and your price cap is a bit lower. At your price range you will be looking at duplexes in rough neighborhoods. These are the waters of cash buyers.

@Erica Gordon Hi, I'm closing on my Duplex on 3-12. I was never intentionally looking for one. I'd see one here or there but all well out of budget for me. I was mainly looking for SFH's, but my realtor overheard a colleague talking in his office about a Duplex that he was about to list for a family member of his. Long story short, snagged an off market deal and couldn't be happier with the property at the price point we're getting it at.

So, to answer your question, I didn’t look for the duplex, it found me lol.

Best of luck in your search!

@Erica Gordon

Hi,

I live in New Hampshire and just finally purchased my first investment property, a duplex. Here in NH it is also a very competitive market, I have been looking for about 3 1/2 years. I have put in 9 offers, some $30,000 above the asking price, but many times outbid by cash offers. Don’t give up, eventually you will get one.

Originally posted by @Erica Gordon :

@Anthony Zayas yeah I'm noticing that a lot of sellers aren't accepting FHA, so now I am considering switching up my game plan a bit & going w/ a conventional loan.
and thanks a lot for that insight about offering higher and renegotiating after the inspection! I will definitely keep that in mind. 
Btw, how are you purchasing your duplex? FHA, conventional, or cash? 

As others have mentioned, you will be in competition with cash offers. The only leverage you have is possibly being able to offer more. I am purchasing it via conventional, but I was only up against another cash offer and had my offer in within 5 days of the listing being up. You have to be fast with today's market and have your finances in order so the seller feels confidant in your ability to purchase.

 

Hope all is well @Erica Gordon ! I recently bought a duplex in St. Louis using a Fanniemae Homestyle loan (very similar to the 203k, but a higher down payment). It took me about 5 months to find the right one. My advice would be to stay patient and be encouraged that the deal you’re looking for will find its way to you!

I'm under contract on a duplex right now and my partner and I have been solidly looking for a 2-4 unit for six months. One thing I learned is two units open you up to the possiblity of lender paid PMI low% down conventional loans. These aren't available through mortgage brokers but instead you have to shop around at little local banks. You also need a credit score of 700 or higher.

We're ecstatic at the one we found....5% down, 3.5% interest rate, the loan stays in-house, and we don't need to pay thousands to refinance when we hit 20% equity to drop the PMI. It's good only for owner occupied single family or two unit buildings. Not to mention, the house we're under contract on would have never qualifed for FHA because it's missing a few shingles that we'll need to pay a qualifed contractor to replace.

So my recommendation, shop around at local banks/credit unions for a mortgage if your credit is good. I was amazed at the world of possibilities that opened up when we pivoted from a 3-4 unit to a two unit.

@Erica Gordon Have you looked for single-family homes that are zoned RM1? If you're planning to use a 203K loan, you could utilize the rehab money by converting it into a duplex. You can find a lot of RM1 zoned properties in parts of West Philly and Germantown within your price limit, yet still within an "okay" neighborhood.

It should not take that long and there is a method we use to shorten the process and make it a lot more efficient. You can waste a lot of time by looking at junk listings. We focus a lot on education in the beginning, the goal is for my buyer to know as much as I know about the duplex market and the different types of duplexes. 

We will typically start with a zoom call and a buyers consultation, talk about the market, how competitive offers work etc. Then we let the client study the MLS for a while and hop on zoom calls to critique properties together online. This process is extremly helpfull, because clients learn what I look for in a listing and how to weed out junk. The we let out client pick 3 favorites and see them in person as an educational exercise, not to write an offer. This provides a baseline and a benchmark for any new listings to compare with.

After this our buyers are usually ready and know exactly what they want. From this point on we may see only a hand full of listings before we write an offer. We also provide a lot of data on how competitive offers are written, so our clients know what it will take to have an 80% chance to win the bid. Sometimes we don't write, because it's too comeptitive and we know there is no chance for a reasonable offer. 

We close quite a few duplexes with clients in Milwaukee, at least 2 or 3 every month, most of them for a house hack, so owner occupied. The key is to educate buyers, not to sell them something. I show patterns and then let them verify them on their own, so they really understand what it takes and can make their own informed decisions. If we have doen our job, clients know what to do.

And yes FHA loans are a non starter, you have to go 5% down conventional, otherwise you are not competitive. I actually have a local lender who will do 5% down no PMI on a portfolio loan. FHA has PMI for life, so you have to refi to get out from paying PMI!

We never found ours... We were looking locally in NJ and made a couple offers. Always out bid, always cash offers.

They are a magnet for retirees. Bury there cash in the property, move in to one unit and think they are making money by renting out the other while they are free to travel, enjoy retirement, etc.

After we got comfortable with our multi-families,  I looked back on the numbers we were running on some of those offers. They would have been absolute nightmares!

I have multiple duplexes across multiple state, from CA to Wisconsin. How long to find ? pretty fast. It's just the offer and your financing shall be ready.