All Forum Posts by: Jean Moynahan

I don't see why you are worried, this should sell in a weekend if priced and marketed correctly. A small market is not reason for concern. The answers you are looking for can only come from a local pro who can take a look at the property, tell you what to do to get it ready (if anything) and then do the job. 

Most seller's use the first or second agent they talk to and unfortunately 80% of all agents are just not very good. Spend some time to find a strong agent, you want someone who has been doing this for 5+ years and does at least 24 deals per year personally, better 30 or 40. And a lot of it should be listings. Ask them about their volume and their standard marketing process. Ask them about the duplex market. Those are easy questions for a pro, if they stumble move on.

@Jean Moynahan

OK - post the listing here and you'll get more accurate reactions.

what do you think of your agent so far?  or are you not using one?

@Jean Moynahan  Just a couple of thoughts.  Duplex investing is still a new opportunity in different locales.  For example, in Austin TX back in 2005 when I began to invest, duplexes were a dime a dozen and no one wanted them.  I began to buy them using the 1% rule!  The more I bought the better my debt-to-income rose.  It was a crazy time to be a buyer, you had your pick with absolutely no competition.  Sounds like Harrisburg today as described by you.  Austin, now, is at the other end of the spectrum, in that duplexes are the hottest commodity or it was up to about 4 months ago and now everything has slowed down a good bit.

With the numbers you spitted out, I question why you would want to sell, but that's another conversation.  The first thing that comes to mind is that you are using a year ago rental income numbers.  You have been vacant for what a year now?  IF YOUR PROPERTY IS VACANT NOW........THAT IS YOUR PROBLEM!   If you fill your property with tenants paying the numbers you state you should have no problem selling your property.  Get real with yourself, get specific as to what you want.  Telling us you're going to sell in the 300s tells me you are not sure what you want.  What is it 301 or 390k.  That is a big spread!  Your rental income based on your numbers are $3750 a month.  1% rule says sell at $375k.  If that was in Austin it would sell north of 500k.  Yeah, your not in Austin but what you described:  Located in class A neighborhood, fully renovated, tenant projected to be medical professionals.....WHAT IS THERE NOT TO LIKE?   

Investors who buy duplexes or small multifamily are looking at it as a business.  If it is vacant, then the business is bringing in zero income!  You will have to sell at a discount vs a business making a positive cash flow.  As an investor, I can tell you EVERY REALTOR SELLING A DUPLEX, always say, rents are below market; you can get more!   They SAY that for one reason, it is more attractive the more money it makes.  When they tell me that I let it go in one ear and out the next!  In a slow market, I AM NOT GOING TO PAY THEM BASED ON PROJECTED RENTS!  If they ARE getting $3750 a month I believe them; if they SAY IT WILL GET $3750 a month I doubt them.  GET MY DRIFT!  Don't fall for the I want to keep one side vacant incase they want to move in one side.  If you are worried about that then rent one side month to month.  However, most buyers of a duplex are investors not looking to move in.

The real problem in giving you advice is that I don't know the Central PA real estate market, but I do know investing! Let's run some numbers that speak to investors no matter where you live. Based on what you did not tell me I will make a few assumptions. You sell for 350k. Here are the numbers as I see them. 20% down (70k), mortgage 280k at 7.25% 30 yr fixed payment is $2335/monthly includes taxes(3600) and insurance (1500). Vacancy rate 5%, maintenance 5%, CAPEX 5%, total expenses 15% of $3750 is $560. $3750 - $560 (expenses) - $2335 (PITI) equal a positive $855 per month doing your own property management! That is a total of $10,260 profit a year on a 70k downpayment plus 5k closing. 10,260 / 75000 is 13.68% Cash ON Cash RETURN! In this real estate environment that sells all day long, no matter where you live. THESE NUMBERS ARE ONLY VALID IF YOUR UNITS ARE OCCUPIED!

When I am looking to buy I want to know 4 things right off the bat.  1. Asking Price   2.  Current rents, 3 Current lease Terms. 4. What if any deferred maintenance needs to be done. If your Current rents and lease terms are NOTHING that hurts your sell opportunity.  Lastly and I don't want to be too critical, but when someone tells me I have no income for a year because I have been rehabbing my duplex.......It raises all kinds of questions, the major one is it is a  DUPLEX.  Shouldn't you have gotten one side ready and rented while you do the other side?  Unless it was a complete gut job, taking a year to do rehab on a 1600 sq feet and 740 sq feet units seems excessive and NOT BELIEVE-ABLE to an experience investor.  In my mind, I am questioning the numbers more as if may be you are having a hard time finding renters.  Renters in place makes those thoughts go away!!!!!!  Now put those numbers on a laminated sheet, show potential investors and go and sell your property......Cash on Cash return or 13%, potential of appreciation and rent increase and keeping expenses fixed, sells anywhere in America. Cheers.  The bigger question in my mind is WHY SELL?

You might want to think about increasing curb appeal compared to your competition.

No, I closed on this one in Jan 2021. 75% LTV 30-year fixed mortgage at 2.875%, my lowest rate out of the 33 SFRs I hold. The rest of the capital was raised by offering savings accounts that pay 8% per annum to investors. Moving forward I'll be waiting till the Fed stops raising rates then buying 6%+ cap rate properties from REI Nation 100% with investor capital. The holding them until rates are more reasonable and they can be refinanced.

@Jean Moynahan

sorry if I missed it, but how long has it been on the market?  

It is a blanket statement because it is in Fannie/Freddie rules that apply nation wide.  Talk to your lender. 

If you want to pay worse terms, you can get financing based on something other than comps. If you want a conventional loan (the loan that typically has the best terms), the value of SFH to quad properties is based on comps (nation wide) . The rent approach is included on appraisal solely for informational purposes.

Good luck

 Residential conventional financing of less than 5 units has value based on comps.  The other approaches are included in the appraisal for reference only.  I do not know if this makes in not useful, but it will not be used to determine the value with conventional financing (which would provide the best terms).

@Jean Moynahan thanks Jean, I was writing quickly and imagining the 20% as capex, maintenance, vacancy misc and prop management in some combination. Again, quick and dirty. It is where banks essentially wind up for investor loans though, counting vacancy and prop management as if they had to do it. 

Curious what CAPEX would come out to if you amortized your recent remodels over 5 or 10 years? Where do you get the 6.5% figures BTW? thats interesting and haven't seen that number--though it makes sense at the rents we are talking about.