The chart above was made from data from the Regional Multiple Listing Service, (RMLS) which is deemed reliable but not guaranteed, kind of like my car. It is the average actual sale price of duplexes (two unit rental properties) sold during the last 6 years in St. Paul, MN. The chart shows that the prices went up more slowly than they went down. Part of the reason for the enormous drop in the average price this year is because of the number of foreclosures. The duplexes that are priced below 100K are selling at a much faster pace than those that are priced higher.
As I would have guessed the prices of duplexes peaked in 2005, just like local home prices did. There are some great bargains out there for those who have money to invest. Some investors are buying small homes duplexes with cash, fixing them up and renting them out. The lowest priced duplex currently on the market is priced just over 14K. I have no idea what kind of shape it is in but would venture to guess that it need some work.
I did work with one Young couple a few months ago who bought a duplex as a first home. They live in the upstairs unit and rent out the lower unit. It made owning more affordable for them and they get some tax write offs too.
Twitter
Flickr
LinkedIn
Facebook
RSS
Posterous
Email
FourSquare
Yelp
SlideShare
Average sales price has really dipped down in St. Paul duplexes, I completely agree that the part of the reason for the enormous drop in the average price this year is because of the number of foreclosures.
The only segment of the market here in my part of the country that is doing well is the condo market. Even that is more associated with the first time home buyers than luxury buyers.
Another way of looking at the price trends of rental property:
With easy credit many renters turned into homeowners. Competition for low end homes drove the prices up. Foreclosures flooded the low end market pushing the prices down again.
The question that remains is what happened to all of the people who used to occupy all of the now vacant houses? Are they living with friends and relatives?
Too bad most of us local investors bought big during the past 7-8 years and now are sitting on a boatload of property that is upside down. If only we get financing these days to pick up some of the great bargains out there. At current prices you can actually cash flow on these rentals. What a concept!
Here in South Florida, the cost of purchasing rental properties declined as well. However, interestingly enough, the cost of rent has not declined by the same proportion. Probably due to the fact that property taxes are still extremely high and owners must cover their costs.
The only profitable way to buy any real estate right now is through owner financing at favorable terms.
Try this one on your sellers
3% down, owner to carry zero interest payments of ___ for 66 months and then the remainder to have a 5.5% interest rate on a 30 year am with a 10 year balloon.
In the blank you divide the amount of discount you need to get to buy at a 35% discount.
Simple formula to buy at almost full retail value and still get a good deal.