Duplex Depot - Duplex and Multi-Family Real Estate

Will a duplex appreciate faster than a condo?

June 5th, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

While researching articles, I came across an old Wall Street Journal article which tried to answer the question ‘Will a duplex appreciate faster than a condo?‘ From my perspective, whether a duplex will appreciate faster than a condominium is not the key issue.

Obviously if you are comparing a duplex to a condo you are going to be occupying one of the units in the duplex.  What becomes important then, is that you are deferring part of your total mortgage payment by renting out the other half of the duplex.  Let’s look at a real world example.

In Everett Washington right now, the average condo price is right around $250,000.  With 10% down that puts your payment at around $1350 per month.  Looking at new duplex properties in Everett, you could probably find one for around $320,000.  Again with 10% down, your payment will come out to be roughly $1726.  So for a little less than $400 a month more, you get a whole extra unit to rent out.

If you live in one half of the duplex, and rent the other out for $1000 per month that would bring your share of the mortgage payment down under $750 a month!  That is cheaper than rent!  The really great part is that because you are going to live in one of the units, you can get regular financing and FHA loans to purchase your property.  This means that you can get into property with as little as 3.5% down.  Plus there is still talk that FHA will allow buyers to use their $8,000 tax credit towards their down payment.  If this is the case, you could be in a duplex for under $5,000 out of pocket.  That is just downright amazing!

I definitely encourage anyone that is wanting to purchase a condo, but that is interested in owning multifamily property, to seriously consider a duplex or even 4-plex to live in! 

If you are ready to make the jump, and purchase a duplex to live in please give me a call at 425-773-3149.  I can definitely help you track down a property that is right for you!

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Plenty of duplex properties in Snohomish county!

May 31st, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

Time for a market update on duplex properties in Snohomish county.  This month 20 new duplexes came on the market and right now there are over 100 up for sale.  Over 100 duplex properties for sale in Snohomish county alone?  That is a bunch!

As of this morning the average duplex in Snohomish County is priced at $383,457 and has been on the market 177 days.  That is a long time to be sitting!  On the low end are the Everett fixer duplex properties, the cheapest is a meager $185,000.  On the other end of the scare are the overpriced new or nearly new duplex properties topping out at around $730,000.  I see no way those are going to cash flow with any reasonable sort of down payment.

In contrast, the sold listings tell the story of what duplex properties investors are actually buying.  In the last 3 months a mere 12 Snohomish county duplex properties have sold.  When it comes to what they are selling for, the average duplex sale price is $327,879, and none of those were over $480,000. 

Looking at these numbers, I just wonder how many owners are bleeding, sitting on duplex properties that do not have positive cash flow.  Personally if I were wanting to start investing in small multifamily properties, I would make sure that I had my financing in order, a solid down payment, and then start making offers on some of these properties that are close to being priced right, but have been on the market too long. 

If you are ready to buy or sell a duplex in Snohomish or Northern King County give me a call at 425-773-3149.  I would like to sit down and discuss the market conditions and how they relate your needs and situation!

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Yes you can purchase a duplex or other rental property with money you have in your IRA or 410k!

May 18th, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

Not everyone knows this, but you are allowed to use the money that is sitting in your 401k or IRA account to purchase rental real estate property!  Imagine not having to stick your money into the stock market, but to be able to really make your money work for you in the real estate market. 

Everyone by now has heard that right now is the best time in the last 20 years to purchase property, but most people are not in a position to take advantage of this opportunity.  If, however, you have pulled all your money out of the stock market (hopefully before it tanked) 

There are some rules and this is something you want to get some advice on, but it definitely is a much better way to make use of your retirement funds than gambling it on the stock market.  The big deal is that you can’t co-mingle IRA funds with your regular money.  This means that your property will have to be held by your trustee, and all the rents have to go back into your IRA.  The basic rules look like this:

Despite all this, purchasing rental properties with your IRA money is still a winning bet.  There are some hoops to jump through, but you get to take advantage of the appreciation and cash flow from your new rental property to balloon your retirement account.

If you are in the Seattle area and would like to sit down and discuss the current market and what opportunities exist for purchasing rental real estate, I am at your disposal.  You can call me directly at 425-773-3149 or send me an email at Jacquie@jacquielciff.com  I can help you locate your ideal rental property and even put you in touch with some independent trustee managers to handle your account.

Jacquie Cliff - The Amazon Negotiator
Let me lead you through the Real Estate Jungle!

Real Estate Agent, Loan Officer and Accredited Buyers Representative serving:
Lynnwood, Bothell, Mill Creek, Seattle, Bellevue, Marysville, Mountlake Terrace, Edmonds, Everett, Snohomish, Kirkland and the surrounding areas!

Call me with any of your real estate questions at 425-773-3149 or email me at Jacquie@jacquiecliff.com anytime!

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Start your real estate investing career out early by buying a duplex!

February 27th, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

Back in August of last year I did a post on ‘Why your first home should be a duplex’ and after reading an article on BawldGuy Talking I wanted to come back and touch on it once again.  With the still low rates we are looking at, it makes sense for anyone thinking of buying a home and wanting to get into real estate investing to purchase a multi-family property.

Lets look at a current example pulled from the MLS, a 4-plex in Lynnwood, listing at $435,000.  Assuming that we don’t even try and negotiate the price down (and I would) it would break down like this:

5% Down Payment - $21,750

Payment at 5.5% Interest - $2,436

A bit steep for a lot of people out there right now.  BUT!  Lets not forget the other tenants in the building in our lovely Lynnwood 4-plex.  They are each kicking in about $750 a month for their units for a total of $2250, and bringing or monthly cash flow down to a staggering $186!  Now I know I didn’t include the taxes, insurance and other expenses, but even with those I am sure you can see that living in a portion of a property and renting out the other units is a GREAT way to get started in real estate investing, while saving some money on your own housing to boot

I will say that not everyone is cut out to manage their own property.  For those people that are forward thinking enough to forego buying a single family residence, and buy themselves an apartment of their own (buy way of purchasing a multi-family property and living in one unit)  there is definitely some big benefits.

Consider the just the difference between the appreciation on a $235,000 condo, a typical purchase for first time home buyers and our example duplex.  At a very conservative 3% appreciation over 5 years, the condo would have appreciated to about $272,500.  A $37,500 gain which isn’t bad.  The 4-plex on the other hand would have grown to about $504,250, a gain of $69,250!  There are of course the side benefits of any cash flow, tax savings and so on.  Plus you have the ability to increase the value of your rental property even further by improving the property and raising rents!

It is my sincere hope that if you are considering buying a home, and have a spark of desire for real estate investing, that you look to living in your first multi-family property.  The advantages are definitely there, and it can act as a gateway to your real estate empire!

Jacquie Cliff - The Amazon Negotiator
Let me lead you through the Real Estate Jungle!

Real Estate Agent, Loan Officer and Accredited Buyers Representative serving:
Lynnwood, Bothell, Mill Creek, Seattle, Bellevue, Marysville, Mountlake Terrace, Edmonds, Everett, Snohomish, Kirkland and the surrounding areas!

Call me with any of your real estate questions at 425-773-3149 or email me at Jacquie@jacquiecliff.com anytime!

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Duplex and Multi-Family Property Update for Everett & Lynnwood

February 21st, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

Winter is quickly fading and I expect we will see more properties coming onto the market as the grass starts to green up.  Here is a quick update on the state of the duplex and multi-family market in Everett and Lynnwood using the MLS information.

Everett Multi-Family Property Statistics

The sold figures for 3-5 unit multi-family properties in Everett were skewed slightly by the fact that there have only been 2 sold in the past 90 days, one of which was a tri-plex that closed at $199,900.  I suspect that it needed some work.  Listings that say ‘Needs TLC’ and ‘Buyer to waive form 17′ are usually in pretty rough shape or there are serious worries. 

Lynnwood Multi-Family Property Statistics

Prices in Lynnwood for duplex and multi-family properties is higher as you can see, with the age and condition of several of the Everett properties pulling the prices down.  One other thing to note is that there are 42 active duplex properties in Everett, and only 8 currently on the market in Lynnwood.

What I am seeing is that for investors with backing, there are some good deals to be made.  The one duplex sale that did happen in the last 90 days was only on the market 19 days and dropped from an initial price of $425,000 to a final selling price of $370,000.  At that price it most likely won’t break even if it is financed, unless of course there was a sizeable down payment.

If you are shopping in this area for a duplex or small multi-family property, my suggestion is to have your financing ready, and make some offers!  The market isn’t moving very fast, which means sellers need to compete if they want to sell.

When you are ready to get out there and start making some offers, give me a call at 425-773-3149 or send me an email at Jacquie@JacquieCliff.com and I will try not to have too good of a time beating up the sellers (proverbially) for you.  Of course if you are looking in areas other than Lynnwood and Everett for multi-family investments, I can take care of you there as well.  If you need and example, just check out my road trip to Aberdeen to look at a bunch of multi-family properties (which had positive cash flow!)

Posted in Everett, Lynnwood, Statistics | No Comments »

New Duplex Properties for 2009

January 14th, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

We have officially made it into the new year, and with it I expect to see a good number of new duplex and multifamily listings on the market in Snohomish and King County’s.  For real estate investors this is a good thing, because with everyone’s credit lines stretched to the max, many investment property owners are looking to unload properties at a discount.  Right now in Snohomish County there are just over 100 duplex properties for sale, and with only 14 duplex properties sold since September 2008, the competition is tough.

To be sure there is disparity between the listing price for duplex properties in Snohomish County and what they are actually selling for, and undoubtedly there are several builders out there sitting on brand-new duplexes that cost more build than they are worth.  For ambitious real estate investors, this of course means opportunity.  If you are interested in getting started in real estate investing in Snohomish or King County, call me at 425-773-3149 and set up an appointment to go over your real estate investing goals and what needs to be done for you to achieve them.

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Investing in Duplex and Other Multi-Family Real Estate Beats the Stock Market!

January 1st, 2009 Jacquie Cliff - Real Estate Agent and Loan Officer

For those of you that are still on the fence as to whether real estate is a good investment or not, I have a fantastic article for you written by Scott Snyder, a real estate agent in North Carolina.    Scott sat down and did the math on if he had invested $33,000 in a duplex property 10 years ago, and compared it to if he had invested that same money in the Dow Jones for the same period.  His results were AMAZING!

What I learned was shocking to say the least. To arrive at the value for the duplex investment I made a few VERY conservative assumptions. First, 20% down payment, 7% interest rate, 3% long term appreciation(Raleigh has seen more). Additionally, I assumed only a 3% cash return from the duplex.

The original $33K if placed in the DJIA would be worth $32.9K today, yes, LESS than the original investment. But the same $33K investment in a duplex with the above assumptions would be worth $119.2K+ or $86.3K MORE than the same $33K invested in the stock market. I realize the real estate market in some areas has seen a tremendous drop over the last couple years, so I am not suggesting that the duplex option is like a money market account. However, even in the areas that have experienced a tremendous drop keep in mind that they also saw insane and unsustainable gains that place their average return at well over 3% appreciation.
Read Scott’s Full Article on Comparing Buying a Duplex to the Stock Market

What does this teach us about investing for today?  I think the answer is simple:

 Buy and hold Duplex, Triplex and other Multi-Family investment property!

In ten years from now are you going to look back on things and wish you had put money into real estate investments that have positive cash flows, or be looking at your retirement with confidence because you have a portfolio of partially paid off, cash flowing investments that will continue to provide for you for as long as you need them?  The choice is yours!

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Duplex conversions make deals possible!

December 23rd, 2008 Jacquie Cliff - Real Estate Agent and Loan Officer

Today while researching articles I came across an old blog post on how converting a single family residence into a duplex can be a great investment opportunity.  The reality is even with home prices down in many places, such as here in the Seattle metro area, the rents that can be generated from single-family home aren’t enough to justify purchasing them as a rental properties.  However if you can find a larger home with the right layout it can be possible to split it into two living units and rent it out as a duplex.  Generally speaking the rents for each half of the duplex is only slightly lower than what you can get for the property as a single-family home.  The result of this is that with a small investment to modify the property you can often times take a property with numbers that don’t work and turn it into one that has a positive cash flow.

Of course, there are always hurdles to overcome in converting a single-family home into a duplex.  Of primary concern is whether the property is suitable for dividing into duplex and what the local zoning and permit processes are.  I never said converting a single-family home into a duplex was easy!  When you start considering converting a single-family home into a duplex be sure that you have a competent real estate agent and remodeling contractor by your side.  This will help you make sure you get into the property for the correct price and have a solid estimate of what it will cost to convert the property.

If you are in the greater Seattle area and would like to sit down and talk with me about duplex properties and real estate investing, please send me an e-mail at Jacquie@JacquieCliff.com or give me a call at 425-773-3149.  If you’re outside the Seattle area and looking for a great real estate agent to help you with purchasing your duplex properties, I can  put you in touch with a hard-working and knowledgeable real estate agent in your area.

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Showing and Getting Offers on Your Multifamily Properties

October 28th, 2008 Jacquie Cliff - Real Estate Agent and Loan Officer

In the process of searching for good multifamily properties for my clients, I see many property owners that seem to want to do everything they can to discourage potential buyers from looking at their properties and making good offers.  There are several things that I consistently see multifamily property owners doing that their agents should be advising them against.

Multifamily property owners consistently don’t want to allow showings prior to having signed around offers.  This means that buyers have to make and negotiate an offer virtually sight unseen.  While I can understand not wanting a parade of potential buyers touring properties on a daily basis and disturbing tenants not allowing any showings is extremely counterproductive, and my clients have not looked at some properties simply because of that.  On others we have made significantly lower than asking price offers primarily because we had little or no idea of the actual condition of the property.

Sellers of multifamily properties also seem to forget that staging is just as important for multifamily property as it is for single-family homes.  While multifamily properties are judged heavily on their financials, having positive curb appeal definitely doesn’t hurt!  Given two properties with similar incomes and expenses most buyers would prefer a nice clean property over one that is looking rundown, as trash in the parking lot and furniture sitting by the dumpster.  A small investment in time and money to make it properly look good will go a long way toward getting more and better offers.

As I mentioned multi-family properties are judged heavily on their financial statements.  While looking through MLS listings quite often I see properties with no financial information included, or at most just the most crude numbers.  To make matters worse many sellers only want to make ‘accurate’ numbers available with a sign around agreement.  As with not letting buyers see the property, not allowing buyers reasonable financial information to judge a property by is almost worse than having them buy it sight unseen.  If you want good offers on your multifamily property, at least make sure that your MLS listing has as much financial detail as possible, and have accurate financial records on hand for serious buyers to see.

The last big mistake that I see multifamily property owners doing is not informing their tenants that the properties for sale.  Tenants will figure out their property is for sale, and it would be a lot better if they had been informed ahead of time and educated on the fact that the releases are still in effect even if a new owner takes over.  Communicating with tenants, letting them know what is going on and reassuring them that they aren’t about to be kicked out will help make selling process much smoother.

Of course I only halfheartedly pass along these tips to you property owners because what he continued to make these mistakes, ready and qualified purchasers are most likely bypassing your properties in favor of ones with better curb appeal and that are more accessible.  This of course means less competition and better deals on your multi-family properties for my buyers!

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Buying a Duplex

September 7th, 2008 Jacquie Cliff - Real Estate Agent and Loan Officer

Why would someone buy a duplex property?  I firmly believe that for those people entrepreneurial enough, it is a great way to not only purchase a home, but invest in a rental property as well.  Buying a duplex has several advantages over a standard single family home.

1. Duplex properties are less expensive per square foot than single family homes.
2. Buying a duplex means you can generate rental income to offset your house payment
   
3. The maintenance costs are lower for one duplex vs. two single family properties
4. Duplex homes, only share one common wall, unlike condos or town homes.

Buying a duplex does have some risk, but most of it can be mitigated by good planning.  Looking ahead and investigating insurance rates, rental prices, and planning for needed repairs and maintenance will greatly reduce the risk of loss over the long term.  I always advise my clients that are purchasing duplex or other rental properties to take a portion of the rent and establish a ’slush fund’ for any emergency repairs that may come up.

Buying a duplex is a great way to purchase a first home, so if you are considering making the jump into owning your own home, look at your local market conditions, talk with your real estate agent and give buying a duplex some serious thought!

Jacquie Cliff - The Amazon Negotiator
Let me lead you through the Real Estate Jungle!
Real Estate Agent, Loan Officer and Accredited Buyers Representative serving:
Lynnwood, Bothell, Mill Creek, Seattle, Bellevue, Marysville, Mountlake Terrace, Edmonds, Everett, Snohomish, Kirkland and the surrounding areas!

Call me with any of your real estate questions at 425-773-3149 or email me at Jacquie@jacquiecliff.com anytime!

Copyright © 2008 By Jacqueline A. Cliff, All Rights Reserved.
“Buying a Duplex”

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