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Jack Hamm
  • New to Real Estate
  • DE
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Lack Of Duplexes

Jack Hamm
  • New to Real Estate
  • DE
Posted Feb 23 2024, 11:16

Hello BP, I am currently looking at markets that I may want to work and live in once I graduate college but I find that in every market that I look into there is only 1 or 2 duplexes in the area. I would consider renting by the room but since I have a girlfriend and we plan on living together right out of school I think that is out of the question. What can I do to find more small multifamily properties or will more properties become available as rates drop and more people are looking to sell their properties? Thank you.

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James Carlson
  • Real Estate Agent
  • Denver CO | Colorado Springs, CO
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James Carlson
  • Real Estate Agent
  • Denver CO | Colorado Springs, CO
Replied Feb 23 2024, 12:11

@Jack Hamm

What about a home with a basement that has a separate entrance? A lot of our house-hacking clients in Denver and Colorado Springs go that route. Either a walk-out basement or a back door on the main level that goes straight into the stairs to the basement. 

One thing to note with those, however, is the zoning. Not sure about where you're looking, but anywhere in Colorado here, if the home is zoned single-family then you can rent that separate space I'm talking about as long as you live there, but as soon as you move out, you can only rent the whole home as one unit.

The trick then is to find a SFH with a potential separate entrance to the basement that is zoned multi-unit. There are lot of such homes here in Colorado Springs.

Also, don't let the lack of a duplex stop you from buying. It's better to get a single or a double sooner rather than waiting two years to find that home run. If that means buying a straight-up SFH, living with your girlfiend in it for two years and then moving on to another home and turning the first home into your first rental, then great. It's a solid option.

Good luck!

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Replied Feb 23 2024, 12:44

I like that you're thinking ahead! I would base this first off of where I want to work first. If it's a certain city where I'm getting a job then I would look closely into the market. One thing that helped me was finding a realtor just as a guide to finding duplexes. Like @James Carlson said don't let the lack of duplexs stop you. Buying a SFH could benefit you too.

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Matthew Porcaro
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  • Long Island, NY
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Matthew Porcaro
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  • Rental Property Investor
  • Long Island, NY
Replied Feb 23 2024, 12:53

Couple of options here: 

1. You can use software like propstream or something similar to pull lists of all 2-4 unit properties in your target areas. Then, you can go the off-market route, and contact the owners directly via direct mail, door knocking, or cold calling the owners and asking them if they'd have any interest in selling. 

2. Depending on your market, look at their ADU laws. Accessory dwelling units (ADUs) are becoming more and more popular nationwide. Most zoning for single family homes is now allowing you to add a separate accessory unit from the home, whether it be in different space in the house, garage, small unit outside, or in the basement where applicable. You can get another income producing area of the house and it still be separate.

3. Look for single family homes that are built well for adding accessory apartments. Properties with basements with outside entrances to the basement with egress windows (you can add these too), split level homes (very popular here in NY) where you can make an apartment upstairs and downstairs. Or, look for properties that are considered "mother daughter" properties or properties with "Mother in law" suites. 

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Andrew Postell
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Andrew Postell
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Replied Feb 25 2024, 12:27

@Jack Hamm lots of factors go on here. One thing that could occur is that the properties that come on the market go under contract right away. Another thing that might happen is that a property might not be listed on the MLS at all. Another might be that maybe that area you were looking at doesn't have many properties to begin with. And another thing that might occur is that some MLS area just don't demand multi-family properties. I live in the 4th largest metro area in the country. We might have about 20,000 properties on the MLS currently and maybe 150 of them are multi-family? But in MLS markets like San Fransisco, NYC, Boston, etc. 2-4 unit properties are significantly more prevalent. The main reason we don't have multi-family properties is because land is so cheap. Here in Texas, they'll build a single family home on an acre of land. But in NYC....there is no land. And that one plat is worth $1,000,000...so the builder's have no choice to build a multi-family property there just to make the numbers work. Lots and lots to consider here.

The main thing I would suggest is to reach out to some agents in the markets you are trying to find properties in.  A good realtor will know the market well and what it takes to find a property.  Sometimes they will know of properties you won't be able to find.  Then, you'll have to be able to make an offer on it quickly.   That doesn't mean you have to close quickly...at least, not usually...but if it's a good property that might mean it will go under contract that day.

The other thing to know is that if rates do go lower, that would mean more properties to choose from...but it would also mean more competition too.  Remember when all the rates were in the 3's?  People were offering $20,000 - $70,000 OVER the asking price.  Lower rates can be a double-edged sword.

Just some things to think about.

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Jeremy Jareckyj
  • Real Estate Agent
  • Salt Lake City, UT
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Jeremy Jareckyj
  • Real Estate Agent
  • Salt Lake City, UT
Replied Feb 26 2024, 06:55
Quote from @James Carlson:

@Jack Hamm

What about a home with a basement that has a separate entrance? A lot of our house-hacking clients in Denver and Colorado Springs go that route. Either a walk-out basement or a back door on the main level that goes straight into the stairs to the basement. 

One thing to note with those, however, is the zoning. Not sure about where you're looking, but anywhere in Colorado here, if the home is zoned single-family then you can rent that separate space I'm talking about as long as you live there, but as soon as you move out, you can only rent the whole home as one unit.

The trick then is to find a SFH with a potential separate entrance to the basement that is zoned multi-unit. There are lot of such homes here in Colorado Springs.

Also, don't let the lack of a duplex stop you from buying. It's better to get a single or a double sooner rather than waiting two years to find that home run. If that means buying a straight-up SFH, living with your girlfiend in it for two years and then moving on to another home and turning the first home into your first rental, then great. It's a solid option.

Good luck!


Totally agree with this. In my market, the multi families are very expensive and the SFH with the MIL basements usually pencil out better.

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James Carlson
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  • Denver CO | Colorado Springs, CO
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James Carlson
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  • Denver CO | Colorado Springs, CO
Replied Feb 26 2024, 07:35
Quote from @Jeremy Jareckyj:
Quote from @James Carlson:

@Jack Hamm

What about a home with a basement that has a separate entrance? 

Totally agree with this. In my market, the multi families are very expensive and the SFH with the MIL basements usually pencil out better.

How do you deal with the zoning issue with your clients? The SFH with basement apartment/walk-out does pencil out better than a true duplex, but you don't have the ability to rent both units once you move out. At least not legally. Now can you get away with it for a little bit, maybe even a long bit? Probably, but "you can get away with it" isn't a long-term strategy. 

Now, if it's zoned for multi-unit that's a whole other discussion. 

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Jay Thomas
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Jay Thomas
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Replied Feb 26 2024, 08:26

The scarcity of these properties stems from high demand, limited supply, and fierce competition, especially from experienced investors grabbing good deals swiftly. To overcome this, consider widening your search to surrounding areas, exploring different property types like condos or townhomes, networking extensively with local real estate professionals, and thinking outside the conventional options, such as renovating older houses or adding accessory dwelling units (ADUs) on your family's property. While it's possible for more properties to become available, waiting for the perfect market isn't guaranteed. My advice is not to rule out renting by the room if you find a great deal on a larger property. This could be a temporary solution, allowing your girlfriend to have one unit, while you rent out the others individually until you save enough for your own place together.

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Rick Albert
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Rick Albert
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Replied Feb 26 2024, 08:32

What's wrong with the two on the market? In most markets it is free to write an offer, even if it is lower than the list price.

I would also look at properties that have been sitting on the market for a long time. They may take a lower price because of how long they have been sitting there. 

If the payments are more of a concern, instead of writing below list price, ask the Seller to buy down your interest rate. You get lower payments and the Seller nets more than if they were to lower their price to match those same payments. It is a win-win.

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Ryan Thomson#1 House Hacking Contributor
  • Real Estate Agent
  • Colorado Springs, CO
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Ryan Thomson#1 House Hacking Contributor
  • Real Estate Agent
  • Colorado Springs, CO
Replied Feb 26 2024, 11:57

@Jack Hamm Rick has some great suggestions. So does @James Carlson

In Colorado Springs, we also have a couple of other strategies that work well besides just standard duplexes. These may work for you. 

1. House and Cottage

2. Converting a garage

3. Converting a basement

4. Converting one side of the house to a separate unit. 

I would consider getting a list of the duplexes in your area, skip tracing the owners numbers and calling them. 

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Brandon P.
  • Lakeland, FL
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Brandon P.
  • Lakeland, FL
Replied Feb 29 2024, 06:52
Quote from @Jack Hamm:

Hello BP, I am currently looking at markets that I may want to work and live in once I graduate college but I find that in every market that I look into there is only 1 or 2 duplexes in the area. I would consider renting by the room but since I have a girlfriend and we plan on living together right out of school I think that is out of the question. What can I do to find more small multifamily properties or will more properties become available as rates drop and more people are looking to sell their properties? Thank you.


Hello Jack,

First off even with your girlfriend, I would still consider house hacking by renting out rooms as this is a very good tactic to get into your first property. I would also consider looking for properties with mother-in-law suites, or ADU's, as this would fix the problem with living with other people.

Best,

Brandon

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Kyle Gardner
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Kyle Gardner
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Replied Feb 29 2024, 18:36

Congrats Jack! My wife and I bought a duplex when we got married and it greatly increased our net worth doing the first few years. I'm a realtor and general contractor in Phoenix and am building duplexes and other house hacking projects with that in mind. 

Lots of good info here on this thread. One trick I like is to find a large house in a non HOA community. Preferably over 2000sqft and with 2 bathrooms. Check the floorplan to make sure you can divide part of the house and add a kitchen on one half. The best projects have 2 living areas so that the only thing you have to do is wall up a hallway and add a kitchen. And viola, you have a private house with a rentable guest house.

Obviously easier said than done, but I find these types of projects quite regularly.