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Thinking of selling a duplex

3,022 Views | 22 Replies | Last: 6 yr ago by GarlandAg2012
GarlandAg2012
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AG
Want a sanity check. Just got married a couple months ago and we want to buy a residence next year.

Currently rented for $2600/mo total rents
Both sides have been rented for 39 of the 42 months I've owned it I believe. Strong rental market.
Have had some expenses, but nothing insane. Most expensive has been refurbishing after getting rid of a bad tenant (somewhere in the $5k ballpark iirc)
After management (10%) I'm clearing approx $1200/month net to me.

If I get the price I want, my ATAX CAGR would be ~30%, excluding rental income over that time period. While I think I got a really good deal and love the monthly cash flow, I think this is a case of buying low and being able to sell high. The house is in Baytown and didn't flood during Harvey, so I would think that would be another check mark in its favor.

Thoughts? Am I an idiot for selling a cash cow?
Ed Carter
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AG
What would you be using the proceeds for? Would need more info to tell you if you are an idiot or not
GarlandAg2012
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AG
Down payment for our first home. Invest leftover in IRAs most likely.
Ed Carter
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AG
I personally am a big fan of holding income producing real estate as it relates to a percentage of one's total portfolio. Sounds like you have a good one on your hands and they don't grow on trees, so that's something to consider.

Also, check with your accountant to see what kind of a tax bill you would be looking at regarding capital gains and also depreciation recapture. This can be pretty expensive.

There's certainly nothing wrong with freeing up cash flow to do something like buying a personal residence if that's what is best for your scenario. However, I probably would keep it and then just set up my budget to start saving aggressively towards a down payment for personal residence
helloag99
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How much do you want for it?
GarlandAg2012
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AG
Waiting to hear back from a couple trusted people in the area for what they'd recommend on list price. I want as close to the "1% rule" as possible which would be $260k
GarlandAg2012
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AG
Ed Carter said:

I personally am a big fan of holding income producing real estate as it relates to a percentage of one's total portfolio. Sounds like you have a good one on your hands and they don't grow on trees, so that's something to consider.

Also, check with your accountant to see what kind of a tax bill you would be looking at regarding capital gains and also depreciation recapture. This can be pretty expensive.

There's certainly nothing wrong with freeing up cash flow to do something like buying a personal residence if that's what is best for your scenario. However, I probably would keep it and then just set up my budget to start saving aggressively towards a down payment for personal residence
Thanks for the advice. I believe I accounted for taxes and depreciation in my numbers, assuming it was a standard 27.5 yr depreciation schedule. Need to talk to my accountant to be sure.
Ed Carter
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AG
FYI you can probably get more than the 1% rule on a duplex. Don't sell yourself short.
GarlandAg2012
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AG
Hmm. That would be great.
SteveBott
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AG
I would hold until you need the equity. That cash flow is nice. I'm also curious to see what the market for rentals are next spring. You might get a nice Harvey bonus then
evestor1
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I own duplexes in the area. 1% is not likely unless it is very well put together.

I watched one last year go for just under .9 after 12 months on market. Your cap is usually 225-250k and then it is situation dependent.

But as always...if you want a realtor or just want to talk
Evestor1@gmail
GarlandAg2012
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AG
Would .9% not be an even higher valuation? I'm confused by your post. Or are you talking 9% cap rate?
evestor1
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Sorry .9 of 2600x100

So start at 234,000 and then add for reasons why your property is better than average.


I'd assume it is well kept and/or already leased so there is an added for that. Adder for a garage/sf/etc

It's a low value market compared to others Bc taxes are high typically. Are you over 3% ?
HomeFinderCody
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Sponsor
AG
Or just get a CMA from a qualified broker or agent on your specific property. That would be a valuable part of the process as you decide what to do.
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GarlandAg2012
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AG
Ah gotcha.

Yes, the taxes are painfully high. I'm hoping the size (3 BR on each side but has a bonus room in each unit that can serve as a 4th potentially), recent updates, and being dry during Harvey helps.
GarlandAg2012
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AG
HomeFinderCody said:

Or just get a CMA from a qualified broker or agent on your specific property. That would be a valuable part of the process as you decide what to do.
My property manager is also an agent and hopefully will be able to help with that.
evestor1
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I too am anxious to see what happens after Harvey. Very few homes have gone for sale recently as compared to other years in Sept.


My realm is NE Houston and had two rental open up recently...it actually took 7-10 days which is average. I had unreal call volume though...mostly people that had major personal issues. Even got yelled at for ripping people off ... they didn't understand or care to understand that I kept my same rates from previous tenants.


Keep us updated on your property. Good luck
GarlandAg2012
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AG
Thanks!
GarlandAg2012
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AG
My property manager/agent has agreed to list the property for me so if anyone is interested in a cash flowing duplex with great rent history and some rent upside, PM me or email me at my handle at gmail.
GarlandAg2012
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AG
http://www.har.com/10-ashleyville-rd/sale_69281278

Should have some better photos soon. Will also fix the typo in the ad.
evestor1
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How is the listing doing? Any legit interest yet?
GarlandAg2012
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AG
Mostly tire kickers. I have no problem being patient but would of course love to get it sold.
jjdavis85
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AG
Would you email me at jjdavis85 at gmail?
GarlandAg2012
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AG
Sent.
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