Archive for the ‘Basic Buying Information’ Category

Often we are asked if a duplex unit should be left vacant on one side to facilitate a sale.  There are pros and cons to this and having one side vacant certainly allows for an owner occupant buyer and broadens the buyer pool.

There are two primary kinds of duplex buyers:  the owner occupant who wants to live on one side and the investor who wants a pure investment and prefers both sides rented out.

It would be a good idea to have a short term lease or have a tenant go month to month to keep income coming in for the owner and to keep options open for an owner occupant buyer.   Another option is to have any new lease have a 60 day landlord written notice to tenant to move-out clause.

Another technique is to consider charging a premium rent to allow a shorter term lease of say 3 to 6 months.  A higher rent will translate to a higher selling price for the duplex too.  Higher rents = higher cap rate/return on investment.

Thanks for reading.

Hong and Dianne Lee

DuplexDianne.com Team


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I am often asked how do I figure out monthly cash flow for a duplex?  First we have to define what cash flow means.  Cash flow is commonly referred to as the net income per month after expenses are paid and deducted from the rental income.   The primary expenses can be:

  1. A mortgage payment each month is dependent on the size of the loan and the interest rate.  So, you could use any of the many mortgage calculators online to compute a P&I payment, principal and interest.
  2. Property taxes.  Property taxes will vary depending on the property and taxing jurisdiction.  If you are provided with a yearly figure on property taxes, divide that figure by 12 months.
  3. Insurance.  Home owners insurance is typically required with most lenders.   Insurance is quoted on a yearly premium basis.  So, again take that figure and divide by 12.
  4. HOA.  If you have home owner’s association dues.  Figure that monthly cost.
  5. So,the above list is used to calculate basic cash flow:
    1. Take gross rents per month
    2. minus principal and interest mortgage payments
    3. minus property taxes
    4. minus insurance
    5. minus HOA
    6. =  Basic Cash Flow Per Month

Now to get more advanced, you can figure these additional expenses:

  1. Average monthly maintenance/repair costs (consider $50 to $100+ per month)
  2. Average vacancy cost (consider 5% to 10% or more depending on your area)
  3. Property management fees (if you manage yourself, then it is $zero!)
  4. subtract all the above and then you will have a more precise picture of Cash Flow!

Thanks for reading,

Hong Lee, CCIM

DuplexDianne Team

http://www.DuplexDianne.com for articles and property listings

Not in the Austin, TX area?  Ask us for a duplex Realtor referral in your city!

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I was showing another duplex for sale and there was something very odd about it.   The back unit had no washer and dryer connection!   For some really old properties (pre 1950 or so) this might be expected and I come across this sometimes,  but this duplex was built in 1999.

Not having a washer/dryer connection is a real handicap to your rentability of the property, the rent rate, and the re-sale factor.   This odd duplex had w/d connections for unit A but not unit B.  It was easy to overlook among the newer built amenities of this duplex.

When it comes to the basics and necessary features of a duplex, always check for w/d connections.  Next to having all the utilities on a single meter, this is a serious problem in the duplex architecture and really unacceptable these days.

Thanks for reading.

Hong Lee/The Duplex Dianne Team

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