Archive for the 'Buying A Duplex' Category

Duplex Chick Improves Property Search Features

said on April 9th, 2014 categorized under: Buying A Duplex


3D white people. Looking for houseYou may not have notice, because it’s a behind the scenes technology change. But, Duplex Chick recently got a new engine behind its Property Search link.

In addition to being able to customize and save a search for exactly the kind of property you’re looking for, you can sign up to automatically be notified when new properties that meet your criteria come on the market.

If you’re not sure where you’d like to live, you can also customize your search to find neighborhoods by school ratings, commute times, and crime rates.

Of course, just like always, if you find a property you’d like to see, give me a call or send an email to I’d be happy to arrange a showing for you.

FHA Changes Twin Cities Duplex Loans

said on December 16th, 2013 categorized under: Buying A Duplex


minneapolis duplex loan limitsWhether it’s a sign of an improving economy, or less risk tolerance, FHA loan limits for duplexes will be reduced as of January 1, 2014.

For much of the housing market recovery, the government sponsored insurance program increased the size of duplex mortgages it insured.

FHA insured limits vary by area and county. Higher priced regions like southern California,  for example, had and have higher loan limits than more rural regions in the midwest.

Through much of the housing crisis, duplex borrowers in the Twin Cities could obtain FHA mortgages up to $467,250. Triplex borrowers could obtain FHA backed financing up to $564,800, and four unit building buyers could owner occupy properties with loans up to $701,900.

After the first of the year, however, those amounts will be reduced. Duplex loans will be limited to $407,800, triplex loans to $492,950 and fourplex loans will drop to $612,600.

Of course, it’s important to note that for many borrowers, FHA’s recent increase in mortgage insurance rates make it a less attractive financing option for many borrowers anyway. And, as always, FHA loans are available only to owner occupants.

Conforming loan limits appear more favorable. For duplexes in the seven county metro area they stand at $533,850, triplexes are at $645,300 and fourplexes at $801,950.

These loans may have higher down payment requirements than their FHA counterparts, but come with less expensive monthly mortgage insurance fees.

If you’re thinking of buying a duplex in the near future, feel free to contact me for a referral to a loan officer who understands multifamily financing.

How To Buy A Duplex With Little Down

said on August 12th, 2013 categorized under: Buying A Duplex, Financing


low duplex down payment requirementsOne of the biggest challenges many buyers who hope to owner occupy a duplex have had is financing. After all, until recently those people really only had two mortgage options; FHA and conventional.

While FHA offered the distinct advantage of a low, 3.5 percent down payment,  this was offset by increased mortgage insurance premiums of the life of the loan. For many, this made monthly mortgage payments unexpectedly expensive.

Of course, for those with the financial resources, there was always the option of putting 20 percent down on a conventional loan. However, for many would be owner occupants, looking at a down payment of $40,000 or more isn’t even conceivable, let alone possible.

However, as the real estate market recovers, banks have begun to look for better ways of doing business with prospective duplex buyers. The best example to date of that is US Bank’s American Dream loan.

The loan is really pretty remarkable. While a borrower cannot currently own any other property, he or she doesn’t have to be a first time buyer, have a minimum credit score, and may even use up to 75 percent of a duplex’s rental income to help qualify for the loan.

Better yet, US Bank will even give the borrower up to $3000 to be applied toward the down payment or closing costs, and may even allow up to $5000 to be escrowed for repairs.

According to US Bank loan officer Conor Hesch, borrowers are not required to have a minimum credit score, and may use alternative forms of credit (like cell phone bills) to qualify.

The loan has no mortgage insurance. Interest rates are typically .5 point higher than FHA loans.

Combined, all members of the buyer’s household must not earn more than $65,000. However, that requirement is waived if the duplex is in a neighborhood where census data indicates most of the neighborhood is of low to median income. This actually encompasses many of the Twin Cities’ most sought-after neighborhoods, as the census counts data from both tenants and homeowners to calculate household income.

The loan may be used to purchase 1-2 unit properties, townhouses and condominiums.

Minneapolis and St Paul Duplex Sales Explode

said on June 26th, 2013 categorized under: Buying A Duplex


duplex sales explodeThe Minneapolis duplex market is blowing up!

For the week ending June 15, 2013, 26 duplex, triplex and fourplex owners received and accepted offers on their properties. Sixty-nine percent of these sellers have equity in their properties, which left the market at a final average list price of $215,325.

For the same week in 2012, there were 15 sellers who accepted offers for their Twin Cities duplexes. Fifty-three percent of these folks did not need to consult with a bank in order to sell, and they did so at an average price of $172,023.

The good news for buyers was that inventory was up the second week of June, with 37 new listings hitting the market. A whopping 86.5 percent of these sellers are neither banks nor short sales.

Traditional sellers had nowhere near the same market share the second week of June last year, with just 48.4 percent of the 31 sellers owing less than what the property was listed for.

Single family home sellers also took advantage of booming housing sales, bring 32.6 percent more new listings to the market during the week than last year. Of course, pending sales were also up 23.2 percent, leaving us still with a 20 percent decrease in inventory.

As we go forward, keep an eye on interest rates. They’ll play a key role in how long and how fast we truly recover.

Minneapolis Duplex Loans Get More Expensive

said on February 28th, 2013 categorized under: Buying A Duplex


minneapolis duplex loans get more expensiveIf you’re thinking about buying a Minneapolis duplex with an FHA loan, you should act now or it will cost you money.

If you sign a purchase agreement after March 31, 2013, new FHA mortgages with the amount of your mandatory mortgage premium for loans with 3.5 – 10 percent down payments will rise from 1.25 basis points to 130 basis points.  This would increase your monthly insurance premium on a $100,000 loan from $104.17 to $108.33.

While that doesn’t seem like such a bad deal, the next piece of information might make you think differently. For all FHA mortgages with less than 10 percent equity when they are placed on a property, you will now pay mortgage insurance for the life of the loan. In other words, for 30 years (unless, of course, you refinance).

Prior to this, FHA borrowers were eligible to have their mortgage insurance premiums waived once they had 22 percent equity in the home or had paid the premium for five years.

Over the life of a $100,000 loan, that adds up to $39,000 rather than the $6500 it would have cost you for five years of mortgage insurance.

Again, you don’t need to have closed on the purchase of a property– only to have come to a written agreement to buy a duplex with its seller.

Hurry, or it may cost you a lot of money!

Minneapolis Duplex Sellers Love Shortages

said on January 22nd, 2013 categorized under: Buying A Duplex


minneapolis duplex shortageWant to know how short we are on duplexes for people to buy?

According to the Minneapolis Area Association of Realtors, in 2012 there were 1212 duplexes sold in the metro area. On average, they sold for $127,950.

Compare that to 2009, when there were 2064 duplexes, triplexes and four unit buildings sold in the Twin Cities at an average price of $83,900.

That represents a 41 percent decline in inventory in just two years.

While we haven’t seen the kind of influx of new listings to the marketplace we so desperately need, new listings were up 20.8 percent for the week ending January 12 over last year.

While 44.8 percent of these duplexes for sale were brought to the market by traditional sellers, one year ago just 29.2 percent were.

Meanwhile, 35.7 percent of the duplex owners who accepted offers on their properties actually had equity in them.  In 2012, just seven percent of the 14 owners who accepted offers could say the same.

As always, the presence of traditional sellers usually translates into higher average sales prices, and it was true here, with the 2013 listings leaving the market at an average final list price of $121,121, compared with the 2012 solds, which averaged $82,261.

The single family home market continued to be a sellers dream, with just 2.9 months of inventory on the shelves. (A balanced market is when there are 5-6 months of inventory.)

Pending sales increased for the week 4.3 percent, while new listings decreased eight percent. Year over year, there are 31.7 percent fewer homes for people to buy.

It continues to be a great time to be a Minneapolis duplex seller.


Fotolia_30926367_XSOne of the most difficult things for a duplex buyer to understand in how, when in multiple offers, the winning buyer may have offered less for the property than they did.

What’s important to remember is there are two components to any purchase agreement:  price and terms.

Sometimes, the terms of an offer are more important to a seller than a few thousand dollars in price. Those might include one or more of the following:

Cash – Most sellers, including banks, would rather get their money sooner, rather than later. Financed offers usually take around 30 days to close. Cash offers, on the other hand, can close as soon as the title work is finished. More importantly in today’s market however,  is the sale is not contingent on an appraiser determining the property’s value and therefore, the amount a bank will lend on it.

No Inspection – Inspections are a great idea for a buyer. After all, major health and safety defects can cost a duplex owner thousands of dollars. That’s the problem, however. Sellers often recognize the results might also cost them thousands of dollars in either the sales price or repairs.

Conventional Loan – FHA insured loans are approved only if a property meets a certain set of  minimum criteria when it comes to condition. Sellers can either make these repairs, or risk losing the sale. Many duplex owners aren’t willing to take that risk.

Quick Closing – Most sellers, including banks, prefer to get their money as quickly as possible. Financed offers usually take at least 30 days to fund, while a cash offer can close as soon as the required title work is done.

Non-Refundable Earnest Money – To demonstrate their commitment to buy a property, a buyer’s Realtor may write an offer in which, in the event the buyer doesn’t move forward with the offer, the seller may keep their earnest money.

More Earnest Money – A buyer may not only make their earnest money non-refundable, but may also make that amount so substantial that all other offers pale in comparison. A seller may be enticed to accept an offer, for example, because if the buyer doesn’t move forward with the purchase, the seller gets to keep $10,000.

Today’s Minneapolis duplex investors market is extremely competitive, and buyers are doing everything they can to make the winning offer on hot properties. If you find you’re losing more often than winning, you might want to change your terms!

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said on February 3rd, 2011 categorized under: Buying A Duplex


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The Lowdown On Duplex Down Payments

said on February 3rd, 2011 categorized under: Buying A Duplex, Financing


sale house and calculatorMany of you who visit this site do so with the hopes of finding out how much of a  down payment you need to have to buy a duplex or investment property.

And while I’ve talked about it before, it’s probably worth revisiting.

If you plan to live in the property, and this is true whether you’re buying a duplex, triplex, or fourplex, the least amount of money you’d need for a downpayment is 3.5 percent. Of course, everybody’s credit and debt ratios tell different stories, so there may be some exceptions to that, but that figure is generally the norm.

That’s because FHA insures loans on owner-occupied properties up to four units. And right now, the mortgages they insure have the lowerst down payments in the marketplace.

If you’re an investor, you’re not as lucky.

While it’s again largely dependent on things like your credit score, debt ratios and number of properties you own, most investors are required to have a down payment of 25-30 percent to purchase an investment property.

The amount sounds staggering. And yet, when most of my investors in today’s real estate market are realizing double-digit cash on cash returns on their down payments, it’s definitiely worth the investment.

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Nest eggWhen I ask the general public what the benefits of owning a duplex or investment property might be, most immediately come back with the term “cash flow”.

While that is certainly one of the reasons to own investment property, there are several others that are often overlooked, including: principal payoff, tax savings and appreciation.

Of these, principal reduction is probably the one most duplex buyers consider least when investing in real estate.

And yet, in a turbulent real estate market, it is the one that is most sure.

Every month when you pay the mortgage with the rent you’ve collected from your duplex, a portion of that payment goes toward paying off the balance of the loan.

In the first year of the mortgage alone, this is often several thousand dollars; an amount which grows over the life of the loan.

Let’s say you went out this month and purchased a $150,000 duplex. Provided it has a positive cash flow, and you manage it well, thirty years from now you will have $150,000 in equity. And that’s in the unlikely event that the property never increases in value.

That’s like saving $150,000 for retirement.

The only difference here is all you contributed was the down payment; which could be as little as $5250 if you’re an owner occupant and $37,500 if you’re an investor.

By the way, investors, that’s a 400 percent return onyour initial down payment.

Not to mention that when it’s paid off it should cash flow beautifully; which should help supplement retirement.

Next week? Cash flow, appreciation and the tax benefits of duplex investing.