What to consider when buying a duplex is this week’s question for veteran real estate investor and property manager Hank Rossi for Ask Landlord Hank.
Dear Landlord Hank,
I am interested in buying a duplex, can you tell me the requirements I should have?
Dear Landlady Melanie,
When I’m buying any rental property, I want to make sure that it will really produce income.
I look at all fixed expenses – taxes, HOA fees if any, insurance, lawn/pool care, mortgage monthly payment, etc. – and add those all up.
Then I determine what I need to do to have the rentals rent-ready, such as painting the units, maybe changing out flooring, etc.
Then I check the rental rates those units will command. Then, I subtract fixed expenses from monthly rents and I know how much I’ll net every month.
If that is a number that works for me and the upfront costs to make the rentals rent-ready are not too high, then I’m ready to move forward.
It’s best to be a little conservative on market rents and a little high on renovation costs, as renovations often cost more than expected.