Should I Sell Now or Wait Until Spring?

[Vern Hixon]

Good morning BP! I recently closed on a duplex in Little Chute, WI which is near Appleton, WI. My plan from the start was/is to flip this property, but I'm having a hard time deciding when I should put it back on the market. Right now both units are rented for well-below market ($3-400/unit). Total rents are currently $1,650. They should be in the $2,300-2,500 range. One of the tenants is month to month, the other signed a lease the day before I signed the purchase agreement that ends Sept 30th. My initial plan was to give notice to month-to-month tenant in the near future so that he is out by April 1st. His unit (both actually) need pretty minimal work. However, his unit will need a new furnace and A/C unit to be able to command top dollar in rent as both tenants pay their own utils and the existing furnace/AC in that unit are old and in-efficient. Total cost of furnace/AC is somewhere in the $5-6k range. Obviously, the higher the rents are, the better price I will get for the property. However, there is currently nothing on the MLS for multi-family properties in Little Chute and I know there is some demand. Should I wait to sell until I get rent up in the one unit and risk there will be other properties for sale on the MLS this spring, or should I sell now without having to put any money into the house when there are no competing properties on the market, even though it's typically a slower time of year? Thanks in advance for your help?

[Jay Helms]

@Vern Hixon - congrats on your duplex. What have you done to increase the value in this flip or is your market hot enough you can hold onto a property short-term and flip for a decent profit without doing any improvements? A seasoned investor is going to negotiate a better price for an older HVAC but as a buyer I might be willing to pay a little more to not deal with the upcoming headache. 

And when dealing with <4 unit properties, my experience, higher rents doesn't always mean a better purchase price for <4 unit properties. To a seasoned investor, yes, I agree, higher rents = higher price. But to the bank (if prospective buyer is obtaining a loan), the bank is going to look at a duplex, triplex, or quad just like a single family and assign a value based on recent comps, not seasoned rents.