If you are getting ready to sell a duplex in Minneapolis or St. Paul the timing couldn’t be better. Inventory levels are at an all-time low. There are just 59 duplexes, triplexes and fourplexes on the market in Minneapolis right now, and 69 properties are pending. It is definitely a sellers market.
St. Paul has just 60 properties on the market and 43 that are pending. Both markets have less than two months inventory.
I can understand that sellers are trying to figure out if we have hit the top of the market, or if they should wait for it to go higher. The one caveat to doing this is that markets change quickly. I remember in 2007 when I tried to help sellers understand that the market wasn’t going to rebound in the Spring. The opportunity to sell, with duplex and rental property prices eclipsing 2006 values, seems perfect.
Here are some helpful tips on getting your property ready for market:
Deal with your bad tenants! I have an exclamation point after this one because it is the most important point I will make. If you have tenants that are messy/filthy, unwilling to allow showings, or even intimidate potential buyers you need to get them out of your property. Sure, this may be the reason your selling in the first place, but a month or two of vacancy in one unit may be the difference of whether you sell or not. It likely be very expensive to keep bad tenants in place.
Today, I had an experienced investor close on a duplex that he was adimate about the tenant being out prior to closing. He was even willing to let the deal fall through if they weren’t out. We looked at the property prior to it being listed on the MLS, so we were the only showing (so the tenant shouldn’t have been angry-which will happen to a lot of them with the number of showings we are having on properties). The tenant was half-dressed both times we went to the property and glared at us the whole time we were there. When you allow someone to do this to prospective buyers you are costing yourself thousands of dollars. I would even go as far to say that a bad tenant will cost you anywhere from $5k to $30k in sales price because you will eliminate a large number of potential buyers.
You need to remember what it was like for you when you first got into owning rental property. A lot of people were telling you that you will have to deal with bad tenants and its a nightmare. When your bad tenants are staring the buyers in the face, and the cloud of Marijuana hasn’t left the room they will run in fright!
Fix small issues prior to listing: Its understandable that you don’t want to fix a small crack in a window or paint the trim etc. The issue that you will run into is that when you leave these items for buyers to fix you will be limiting your potential pool of people that will make an offer on your property. This is especially important at the point of entry and with curb appeal. If people see peeling paint, missing or broken windows and screens or a dirty entryway you have already set-up yourself for failure. I have often heard that buyers will make a decision on whether or not they are going to buy a property in the first ten seconds of entering it. If you don’t set the tone for a good showing early you will likely fail all together.
Paint: Reader’s Digest stated that the return on investment for painting was 1000%. They didn’t provide details of if you were doing it yourself or paying someone to do it, however it is the most cost affective way to add value/sellability to a property.
Clean For Your Existing Tenants: Some people find this absurd. If my tenants won’t clean up why you I? Because it is costing you money on your bottom-line. Even complete slobs seem to notice another persons dirtiness. This may cost you a few hundred dollars, to hire a cleaning company, and your tenants will be excited to have someone clean their home! I know it goes against some people’s priciples to do this, but the end result will be well worth it.
Get My Help: I can help you in two major ways when preparing your property for market. First, I will walk through the property with you and explain what fixes make sense and sometimes where you don’t need to fix something. I can also help you find people to do the work. I have been investing and renovating properties since 1998 so I have a number of great contractors and Handypeople that can do a great job for a reasonable price.
Three other Ideas: Three more significant fixes that offer a big return are replacing appliances, adding a tile backsplash to kitchens, and replacing kitchen counters. Why do these when the buyer can? Think of it this way, most buyers can afford to make the downpayment on the property and won’t have a lot left over for these types of expenses. They are willing to pay more for properties that have these items already handled because they can finance it in the price they are paying. A buyer’s monthly payment will increase by only $20 when they are paying $5,000 more for a property. They can often fit this in their budget, but can’t write a check to do it on their own.
You can often find a four-piece applaiance set for $2,000. Replacing a counter top will be under $1,000 and at times under $500, and a tile backsplash will cost you a few hundred. The reason I emphasize a tile backsplash is that it is the first thing buyer’s eyes will gravitate to when they walk in a kitchen. Its at the normal height you focus your vision on, so it makes a big impact.
Feel free to call or text me if I can be of help to you. 612 332 9000