How To Sell A Duplex: 5 Key Steps To Get A Great Offer

You may be wanting to sell a duplex because you want to upgrade your investment portfolio, or you have decided to cash out and buy a single-family house instead.

There is a great deal of competition for multi-family home investments in today’s market, with both novice and seasoned real estate investors eager to make acquisitions.

The most sought-after real estate business has recently been in the multi-family sector. But even if the market is in your favor, selling a duplex is not easy. Making repairs in a cost-effective manner, arranging showings with renters, and tallying rental income are all tasks you must do. Here are our best tips on how to sell a duplex.

Prepare The Property For Sale

Make Repairs

Multi-family properties are an investment, and potential buyers or investors want to see immediate positive cash flow. If you’re selling a property, taking care of necessary repairs beforehand will make it more competitive. Make fixes that won’t cut into your profits too much. It would help if you photograph each apartment in the building, capturing features such as the foundation’s state and the roof’s age to get an accurate estimate of the necessary repairs.

Peeling paint, mildew, and broken windows are all repairs that often get put off. Electrical, plumbing, HVAC, and roof problems are just a few more catastrophic problems that might arise. The inspection will reveal these flaws, and you’ll either have to pay extra to fix them before the sale can go through or accept a lower purchase price.

Improve Curb Appeal

A home’s asking price may increase by as much as 11% just by having a more appealing fa├žade. Investment veterans say that landscaping is another step to increase the value of a duplex. Since the next owner will have to deal with care, it’s in everyone’s best interest to use low-maintenance landscaping techniques, such as:

  1. Plant some flowers that can withstand pests and dry conditions. Before making a purchase, research which plants are local flora.
  2. Substitute gravel or river rock for grass, and think about laying a chic stone paver walkway. When it comes to water conservation, some states even provide financial incentives to property owners who decide to do away with their lawns.
  3. Put some bright blooms in window boxes and use plants to frame the entryway. Putting a splash of color on the door is a simple way to improve the home’s overall aesthetic. 
  4. Inexpensive curb appeal improvements include giving the house a good pressure wash, clearing away weeds from the garden and fixing any broken sidewalks or driveways, doing any necessary paint repairs, checking for broken window screens, clearing out the gutters, and painting the front door.

Prepare Your Financials

An investor is the most probable buyer of a duplex. They will want to investigate the rental property and the market more thoroughly financially. Investors are often interested in learning about items like current rentals, operational expenditures, and occupancy rates.

Create a folder with this information for interested purchasers to peruse. Having this information on hand will allow you to move the transaction forward more quickly. 

Financial data is what investors are after. The building’s hue is of little consequence to the financier. The cost to them is an important consideration. That’s a key indicator investors look for, so make sure you nail it.

How To Value A Duplex

Putting the right price tag on your home is one of the most effective ways to attract buyers’ attention. Properties that are priced too high are often overlooked. Buyers may become suspicious of a property whose sale price has been reduced many times.

Many would-be buyers utilize multiple listing services (MLS) to search for homes and often employ filters with nice, even numbers. An investor of a multi-family home will consider the property’s worth and income possibilities when deciding on the offer.

Check out nearby similar properties to get a sense of the duplex’s worth. In addition, calculate your NOI (net operating income). That’s how much money the duplex generated from the rent after deducting all the expenditures. A property’s worth is typically calculated by dividing the net operating income by the investor’s preferred capitalization rate.

How To Sell A Duplex

List the duplex at a smart time of year. Summer is the prime home-selling season in Houston. The new duplex owner will have the same amount of time to have the property ready for tenants in August when most leases are renewed.

Finding A Buyer 

Owner Occupied

Even though landlords typically acquire duplexes to expand their portfolio, house hacking is becoming more popular. This refers to purchasing properties such as a duplex, triplex, or quad and occupying one of the units. You should expect a higher offer from a buyer who plans to live in the home, but financing may be more difficult for an owner-occupant.

Selling To Tenants

If you have long-term tenants, you may partition the duplex and sell their half to each. Offering to stay put to your long-time tenant instead of leaving is a kind gesture that might make the transaction move quickly and easily for everyone involved. 

Suppose your tenant is having trouble securing traditional finance. In this case, you will collect monthly payments from the sale that account for interest, the payment schedule, and any possible default. Seller financing is expected until the tenant can get a mortgage.

Are Multi-Family Homes Hard To Sell?

It depends. While most real estate agents can help you with either investment properties or single-family homes, some may not be well-versed in both. Get in touch with a top real estate agent experienced in selling multi-family homes, or consider selling your duplex to house buyers like Assemble Houston for a less hassle transaction.

Remember About 1031 Exchanges

A significant tax liability might emerge from the sale of a duplex. When you use the proceeds from the sale of one investment property toward the purchase of another, the seller is eligible to defer capital gains taxes under a 1031 exchange.

You have the option to invest in real estate rather than cash out at closing. The replacement asset doesn’t need to be of the same kind as the one being given up. You can sell a multi-family property in exchange for other properties, such as a possible location for a retail store, an Airbnb, or farmland.

Working with a realtor experienced in dealing with investment properties is recommended due to the stringent restrictions and timeframes involved. For example, having one title for a duplex means you must sell both units simultaneously to prevent legal entanglements. You may sell each half of a duplex independently if you subdivide the buildings into individual titles.

Finally, it would be best if you kept in mind that the sale of an investment property results in taxable income the moment you get the money from the sale.

Leave a Reply

Your email address will not be published. Required fields are marked *