Should I make an offer on half a duplex?

Question

It's an approved short sale for 58K, vacant (formerly tenants there), so possibly short sale process might move faster. I don't know if I can realistically offer lower than 58K--I need to talk more to my realtor. It should rent from between $850-$950/mo. ARV should be around 100K.

It needs tree trimming, carpet removal and re-flooring, serious cosmetics, and removal of heavy dog odor. There don't appear to be an serious issues with the house though. Roof looks good.

All the houses on this street are duplexes. It looks like others have split ownership as well. Some have half of the roof in one color shingle, the other half in another color. So the owners deal with their half of roof independently. No HOA.

Everything about this looks good except for the half duplex factor. I'm not that familiar with the pitfalls of half-duplex ownership.

As I go to these properties, I'm finding that everyone has some serious drawback. One's in a high risk flood zone, another has flat roof, another is good but has multiple ppl interested, bidding the price too high etc.

I'm wondering if I should just take a chance on the half duplex? I don't know if the perfect property is going to come along, ever.

Steve Babiak · Answer

OK, seems that there is a terminology issue that needs to be resolved.  What I call a duplex is a property with two units, both on the same deed; this is the "smallest" kind of multi-family.  What I think you are calling a duplex is actually what I would call a "twin", meaning that there are actually two separate houses, on two separate parcels, on two separate deeds; the houses and parcels share the "party" wall and property line on one side.  They are almost like rowhomes, except there are only 2 of them connected rather than a larger number.

So, should you make an offer on one side of a twin? Sure, why not - I even own one myself.  These can be found all over the place.

Now, if you are really referring to a duplex, then it might have been converted to condo or it might be a co-op; you'd probably be better off avoiding these.

Now, I have to admit that there are duplexes with two side-by-side buildings, with both units on the same deed (been through at least one like this myself), but when this type of property goes for sale, you buy both sides since they are on the same deed.

The legal description (found on the deed at the county courthouse) and zoning should clarify what the property in question really is.

Terminology can be confusing.

Scott R. · Answer

good thing i kept reading.. i was on google trying to figure out what yearn was..
 -Scott

Mark N.A · Answer

Bienes --

Didn't you post on another thread about undesirable neighbors?  If you don't want 'em a yard away, why would you want 'em a wall away?

For me it's all about 'control'.  In my totally-owned dupes I can tell one unruly tenant to shut up/clean up/straighten up or get out.

The only way I'd ever go with half of a dupe was if it was such a STEAL that I couldn't walk away.

Just my $0.02.

Mary Jane McCabe · Answer

I personally would not buy a duplex. I had a bad experience with a duplex where the other owner adjacent to the property sold their home to a problem owner. It drove my renters away and I had limited options as to  what I can do. I could not buy their property because they were asking too high a price.
          
          MJ
          [link removed]

Stephen Leblanc · Answer

I would never buy half a duplex.  No matter how good of a deal you are getting, having an idiot for a neighbor will make it very hard to rent for long periods of time and even harder to sell.  And there is nothing you can do about it because they own their home.  I don't like the fact that I wouldn't be in control of the whole building.  If the deal is a steal, see if the adjoining property owner is willing too sell.

steve

Steve Babiak · Answer

Just to clarify, the dictionary definition of "duplex house" seems to follow what I posted earlier:
http://www.thefreedictionary.com/duplex+house

Bienes Raices · Answer

Thanks for your insights Michael. But I'm planning to buy and hold, not flip, so my goal is to the bank to come down a bit more so that it comes close to the 50% rule. This is one of those short sales that's been poorly priced by the BPO, the seller/agent, or whoever does the pricing. Thus, it's been sitting on the market for months.

Michael P. · Answer

First:  There is almost never a perfect deal.  On occasion you will get lucky and find one but they often aren't.  One time I almost didn't do a deal because the house backed up to railroad tracks.  It ended up being my best deal ever and I netted 54k.  I was soooo close to backing out.

I also call what you are mentioning a duplex.  That is the correct term.  I have purchased one of these(just one side) and I would do so again in a heartbeat if the numbers worked.  It was one of the few houses I have ever wholesaled and netted 9.3k.

Your numbers are right at the breaking point when I evaluate deals.  I don't know how much repairs is needed in your deal but anything under 100k I require at a bare minimum 40k spread.  You have 42k assuming your ARV is correct.  What if the true ARV is 90k?  You are working a super slim deal one in which you probably won't make much profit if you intend to fix and flip it.

Urine is no doubt nasty but don't let it break a deal for you.  My first purchase was a cat/dog infested house.  My partner couldn't even stay inside the house.  He walked out and was just like well...it's up to you to view the rest of the place.  Those animals had urinated in the place everywhere.  It was their personal litter box.  It was a slab foundation and I ended up having to seal the concrete.  We never did get the smell out completely.  I experimented with every urine product on the market and nothing truly worked.  If I came across one like that in the future I would buy it.  The numbers just have to make sense.

Should I make an offer on half a duplex?

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