Finishing a flip - whether or not to rent duplex before listing

Rehabbing & House Flipping
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Finishing a flip - whether or not to rent duplex before listing

Geoff Schroeder
Member since 2018 · 12 posts · 1 vote

I am nearing completion of a property I purchased with intentions to keep in my rental portfolio but have decided to "ring the register" to build a little cash while I see what the market does. The property is a top/bottom duplex that would be suitable for a house hacker or an investor. I plan to list it at a competitive price to move it quickly. It is a turnkey property that will show nicely and I'm considering listing at $299k. Market rent for both units rented is $2300 to $2500 total/month. Yes that isn't a 1% deal but the cap rate isn't unusual for the area; especially for turnkey. Also, each unit is separately metered for water and electric (somewhat rare in downtown Wilmington) and has W/D hookups. 

I self manage all my other properties so I am perfectly comfortable with finding a good quality tenant prior to selling. I'm debating whether to list it vacant or possibly just lease the top floor so the buyer knows that they'd have some income coming in right off the bat. That may appeal to a house hacker. Or I could rent both units to try to attract more of a turnkey investor. 

What do you think BP community? Any feedback is greatly appreciated!

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Sergey A. Petrov
Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
4y

List it vacant and include rental rates in your listing. You’d be limiting your buyer pool otherwise. Right now it is “brand new”, fully remodeled, hasn’t been lived in, a buyer can choose to rent both or just one (what if you rent the top but the buyer prefers to occupy the top and lease the bottom). If you rent one or both, the buyer is inheriting a brand new tenant with no track record. If you list, get no bites, and suspect it might sit on the market, reassess then.

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  • Greg Larson
    Investor · Knoxville, TN · Member since 2016 · 116 posts · 26 votes
    4y

    @Geoff Schroeder if you know the cap rates that investors are looking for in your market, and that's what your sale price matches, I think that's a good move.

    Also, as an investor that's currently looking to house hack a duplex, I think filling one unit and leaving the other one vacant is a good idea. For a guy like me, that would be a big "green light".

    Is this in Knoxville TN by chance? 😆

    (Keep in mind I am someone just getting started on this investing journey. I don't have years of hands-on experience yet)

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  • Sergey A. Petrov
    Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
    4y

    List it vacant and include rental rates in your listing. You’d be limiting your buyer pool otherwise. Right now it is “brand new”, fully remodeled, hasn’t been lived in, a buyer can choose to rent both or just one (what if you rent the top but the buyer prefers to occupy the top and lease the bottom). If you rent one or both, the buyer is inheriting a brand new tenant with no track record. If you list, get no bites, and suspect it might sit on the market, reassess then.

    2Reply
  • Steve Donovan
    Rental Property Investor · Green Bay, WI · Member since 2016 · 150 posts · 94 votes
    4y

    Hello @Geoff Schroeder  I would list it empty.  Many investors feel much more comfortable in choosing their own tenants on their own leases.  Inherited tenants often turn out to be a real pain... "the previous owner told me I could xxx".  Best of luck in your investing future!

    1Reply
  • Geoff Schroeder
    OP
    Member since 2018 · 12 posts · 1 vote
    4y
    Quote from @Sergey A. Petrov:

    List it vacant and include rental rates in your listing. You’d be limiting your buyer pool otherwise. Right now it is “brand new”, fully remodeled, hasn’t been lived in, a buyer can choose to rent both or just one (what if you rent the top but the buyer prefers to occupy the top and lease the bottom). If you rent one or both, the buyer is inheriting a brand new tenant with no track record. If you list, get no bites, and suspect it might sit on the market, reassess then.


     Got it, thanks! You echo a few friends I've asked.

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  • Geoff Schroeder
    OP
    Member since 2018 · 12 posts · 1 vote
    4y
    Quote from @Steve Donovan:

    Hello @Geoff Schroeder  I would list it empty.  Many investors feel much more comfortable in choosing their own tenants on their own leases.  Inherited tenants often turn out to be a real pain... "the previous owner told me I could xxx".  Best of luck in your investing future!


     Thanks for the input. You are right... I've had that problem too when I've inherited tenants. 

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  • Stephanie MankePro Member
    Real Estate Agent · Wilmington NC · Member since 2019 · 4 posts · 2 votes
    4y

    If you're in Wilmington, I probably have buyers for it.  Leave it empty please!

    Stephanie

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  • Natalie Schanne
    Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Geoff Schroeder - I definitely agree with the list it empty part. A freshly renovated house / multifamily is exciting to house hackers. I've listed multifamily on both sfr and multifamily MLS to try to capture all the potential clients. Mine was a 2/1.5 and 2/1 so I listed it as a 5/2.5 with two kitchens and as above.

    Tenants also have junk and sometimes block showings.

    You should know within 2-3 weeks if you’re under contract at a price you find acceptable. One option is to offer to “provide rental applicants” to the buyer by having it listed for rent simultaneously with the purchase closing. So upon closing they have a bunch of people who are already happy to sign a lease.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    I also agree with keeping it vacant and getting it listed quickly.  The new owners can find their own tenants and close quickly if it is vacant. 

    0Reply
  • Kimothy Bynum
    Real Estate Agent · Detroit · Member since 2020 · 127 posts · 63 votes
    4y

    Sounds like a good idea to me. You can show the kind of rents it will get which is a good idea

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    4y
    Quote from @Geoff Schroeder:

    I am nearing completion of a property I purchased with intentions to keep in my rental portfolio but have decided to "ring the register" to build a little cash while I see what the market does. The property is a top/bottom duplex that would be suitable for a house hacker or an investor. I plan to list it at a competitive price to move it quickly. It is a turnkey property that will show nicely and I'm considering listing at $299k. Market rent for both units rented is $2300 to $2500 total/month. Yes that isn't a 1% deal but the cap rate isn't unusual for the area; especially for turnkey. Also, each unit is separately metered for water and electric (somewhat rare in downtown Wilmington) and has W/D hookups. 

    I self manage all my other properties so I am perfectly comfortable with finding a good quality tenant prior to selling. I'm debating whether to list it vacant or possibly just lease the top floor so the buyer knows that they'd have some income coming in right off the bat. That may appeal to a house hacker. Or I could rent both units to try to attract more of a turnkey investor. 

    What do you think BP community? Any feedback is greatly appreciated!


     Go vacant. Investors will buy empty or occupied, but owner occupants really only want to buy empty.

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