Investor · Tampa, FL · Member since 2010 · 377 posts · 56 votes
Hey guys,
Under contract w/ a duplex for 33k, ARV is 70k ( 2 closed sales very similar @ end of April, leased). Light rehab needed, less than 10k. Would you lease it first to sell it w/ the income stream or sell it vacant and why?
Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
15y
A buy and hold LL would be far more attracted to a leased property (I know I would) as long as you have good tenants in place. I'd want to see their credit report, references, etc. Don't just throw someone in there. Nobody wants to take on problem tenants.
Real Estate Investor · San Antonio, TX · Member since 2010 · 122 posts · 17 votes
15y
I would lease it up since the ARV calculation is based on 2 closing that are already leased. You have more at your disposal to pitch. ie.ROI. You still want to make sure you put a good tenant in the property.
Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes
15y
Agreed, Rent it first. If your end buyer needs financing (assuming a loan of that size is available) it will be easier for them to buy when the property is producing income. Also the type of investor who if going to buy a turn key property is typically not the type to want to find tenants.
Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
15y
A buy and hold LL would be far more attracted to a leased property (I know I would) as long as you have good tenants in place. I'd want to see their credit report, references, etc. Don't just throw someone in there. Nobody wants to take on problem tenants.
Residential Real Estate Agent · Ocala, FL · Member since 2009 · 255 posts · 65 votes
15y
toni, i bought a pair of duplexes in my neck of the woods with the intentions on flipping about 5 months ago. Paid 45k for the pair and did roughly 5k/door in repairs/upgrades. I relisted them for sale at 130k which was slightly higher than what i felt the market value was. The set of duplexes next door had a mortgage on them for over 300k, so i sort of hoped the guy next door would want more units to cost average.
Turned around and rented out all 4 units thinking it would help the resell, gross rent is about 1800, could of been higher but I was a little lazy and preferred better tenants. The tenants have been a positive thing except for the hassle of having to deal with them. (I hate being a landlord).
The only negative is the cash flow has made me unmotivated to reduce my asking price and the property continues to sit on the market without much activity. If this was a normal flip for me I'd be usually happy to reduce the price to 110k or 99k which would make this place disappear i think. That said, i wish ever flip had positive cash flow for holding costs. Would make life a lot less stressful when you make a mistake and have to hold something a little longer than expected.
Detroit, MI · Member since 2011 · 1 post · 0 votes
15y
While it's not going to be worth any more when you rent it out, you make it more attractive to an end buyer. Seriously, if you post it every day on craigslist, you're looking at 2 weeks before you have it rented it out. It's worth it to make an easy sale.
Residential Real Estate Agent · Ocala, FL · Member since 2009 · 255 posts · 65 votes
15y
OH....and i was meaning to say this point
List it when the property is ready for sale, don't bother waiting to fill the units. Once the property has a unit rented change your listing. I highly doubt it's going to change one way or another assuming you rent it to a decent tenant at market rates.
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
15y
If you can sell the contract without bringing it to close, do it! You may want to have lease agreements in place first. This will show proof that they are livable, and there will be less uncertainty on the amount of work needed to make them livable. Plus the potential buyer can calculate their ROI. If it needs 10 k in work, have a reputable contractor put a bid together. You will have an entire package you are selling. A purchase agreement, lease agreements, and a rehab contract. To make a deal sexy, take away the unknown. :lol: