Are there really investors out there for my first few multi-family "building-blocks"?

[Jason Hempel]

What's up everybody? I've been analyzing some of the classic texts (namely Nickerson) and am wondering who is your typical duplex buyer (after renovations) in 2015? What does that investor's profile look like?

I mean, let's say I follow Step 1 of this book to the exact outcome described. I buy a duplex in need of work, manage the property for a couple of years while saving for renovations from both from the operating income and personal savings, then after two years, dump my savings into fixing the place up, raise rents, and put the property on the market to execute my exit strategy. Herein lies the problem as I see it...

What kind of investor is out there who would actually pay top dollar for a well-maintained entry level duplex? After renovations, my exit plan will cause me to aim for, let's generally say, a 9-10% cap on the new and improved operating income. What's in it for the investor at that price? I mean it's not like there's any long term leases in place that provide the buyer with stable cash flow. Most (if not both) of the tenants will likely have less than 12 months term left on their lease. If I were a buyer, I wouldn't pay a 9-10% cap rate for that kind of volatile cash flow. Further, there's no upside left in the deal for the next owner, because I've just turned the property around and maximized it's cash flow.

To me, it seems like buyers, or investors in general, could do much better with other investment vehicles when considering the returns that my little duplex would provide them. Are there really buyers out there for this sort of property?

I suppose there is always "somebody" out there. Maybe a retiree that is looking for more control over their nest egg, maybe a young investor just starting out who is planing on living in one of the units, etc, etc. However, that leaves me (the seller) with a very small bidding pool, (and if I'm right) I don't like small bidding pools as a seller.

Nickerson is considered the sage of sound advice, but in today's world, how do you execute Step 1 with so many distressed properties out there? I'm just not seeing many willing buyers out there for maximized duplex investment properties. Please help me understand.