How to sell complete rehabbed turnkey duplex

Question

My first investment rehab on a big duplex is almost complete. I was a total rehab from basement up! My initial strategy was to brrrr the unit for a 920 month cashflow but a change in plans with me about to move out to another state I’m wanting to sell it as soon as completed. The numbers are as follows purchase price $16k. Total renovation $127k. ARV $220k    It was a huge 2/1 per side 1500sqft now 3/2.5 per $1200 rent per side.  I’m debating hard on selling so I can use cash that I need to start another project and not deal with trying to be out of state investor just yet!  My question is how and when to start looking for buyers?? I’m sure it’s gonna be a seasoned out of town investor.  NEED some solid guidance!!

Marcus Auerbach · Answer

@Antoine Pippens I am shocked with the spread from 16k to 220k - good for you. At 127k renovations I know you did a complete job!

I imagine that Indi is somewhat similar to Milwaukee in terms of property values and buyers. No doubt you can find an OOS investor, or even a local investor, but here is the problem: most investors who are interested in a duplex do not have much money and they are always looking for a good deal.

Here is what I found with almost every diplex listing I have. You will net the most amount of money if you sell it to a first time home buyer who wants to house hack. Find a great real estate agent (not just the first with a pluse) and list it on MLS. Especially with the brand new finishes you have a huge appeal to HGTV spoiled first time home buyers; with the right strategy you can often drive a little bidding war and maximize your return.

Antoine Pippens · Answer

@Marcus Auerbach. Yes it was a great deal I purchased from city. I used 203k loan which nobody informed me how they really work and all the money you have to use upfront. I learned soo many things on how the whole process goes from permits contractors watching budget scheduling and even water main taps and sewer issues.  I am definitely gonna try to sell without tenants for first 30 days once completed and if don’t get an offer keep it switch title to my LLC and rent both sides and refinance to get all my money I put in!

Don Petrasek · Answer

@Antoine Pippens check into the tax ramifications of selling, you may be subject to a big tax hit depending on how long you’ve owned the property and what you do with the proceeds.  Also did the city purchase come with any strings attached?  I’ve seen those type of transactions here in Cleveland come with penalties for selling quickly (e g <5yrs)....usually they want owner occupants in the property to stabilize the neighborhood.

The other comments are spot on.  A totally rehabbed multi family, especially a big one is appealing to both first time buyers and investors.  If Indianapolis is as short of inventory as Cleveland is, I think you’ll see either group pay up for your house.....and a multiple offer situation is likely.  One strategy is to price it just below market in an attempt to get a bidding war going.

James Wise · Answer

Best bet is to list it with an agent who only deals in rentals and works at a brokerage that handles a large amount of property management. They will be able to get you the highest price. Selling rentals is much different than selling to owner occupied folks.

Whitney Hutten · Answer

@Antoine Pippens Where in Indy?  You mentioned cashflow was $920.  Post in the marketplace and link back to this post.  There are so many people looking to househack these days, you might pick up a buyer who is cruising the forums.  If the deal is good for a turnkey, an investor may want it a well.  You can't sell it here... but you can generate interest on BP.  Also, for retail, post it everywhere on social media.  For investor, do an analysis on BP calc or DealCheck.io and post circulate the PDF widely.  Be realistic with numbers... an investor should always doublecheck numbers, but if you make it easy for someone to dig further, you have opened up a conversation.

Ben Wyatt · Answer

@Antoine Pippens I’m curious how you found out about the property. I’m in the area and interested in getting started with BRRRR, and I know these city-owned properties can have big upside.

Victor Vella · Answer

Only works if you can constantly source good deals - sounds like your good at acquisition 😁. I’m fortunate enough to be able to turn down deals.

Otherwise if you find the process of hunting or rehabbing painful - just enjoy knowing your holding the asset til it sells

Victor Vella · Answer

Agree with Don and Marcus - I’ve made a living off pricing competitively.

It either leads to

#1)bidding wars

2) lower cost basis

#3) increase in money velocity

Think of this you price high wait 3-6 months for a deal, end up negotiating down and lowering price increase risk of market changing take another 30-60 days for deal to close another 60 to source and close another orrrr

Price aggressive create demand, bidding wars, buyers into a pipeline make a little less money house sells in 7 days close in 30-60 days another 60 to source and close......

Instead of 1 deal with that capital per year you can now do 2-3

Increased Money velocity IMO leads to increased annual ROI

Marcus Auerbach · Answer

30 days are plenty - just make sure you price it correctly. The temptation is to price it a bit high and hope to make a little extra and the result is that it will take a while to get an offer and most likely it will be less than full price.

With a property like this I follow a simple strategy. Best to apply some FOMO (fear of mission out) - price it just low enough that everyone who is checking MLS twice a day knows it will go fast. Start social media advertising on Tuesday and draw attention, keep it in delayed on MLS and get the attention of agents. Go live on Thursday, make sure it's on Zillow etc on Friday and hold 2 open houses on the weekend. People will see there is a lot of interest and write offers knowing they have to compete. Instruct you agent to not present any offers before Monday, so you have the entire weekend to get people through and not only the fastest ones. If executed correctly, you will end up with multiple offers over asking price. This strategy typically results in a higher contract price than starting high and negotiating a discount with a hesitant buyer.

Aaron Stuiber · Answer

@Antoine Pippens Awesome job! I'd love to see some photos of the finished product. Sounds like you put alot of time and effort into the project and I'm sure you're anxious to find the right and best turnkey buyer. Marcus makes a great point... Looking for someone that is interested in House Hacking a finished product will be key for the first 30 days. After that point I'm sure you won't have a difficult time finding an investor with that budget at those rents. Bigger Pockets is a great place to post listings just like Facebook Market Place and local real estate groups. Best of Luck!

How to sell complete rehabbed turnkey duplex

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