Don’t Make the Mistakes This Duplex Owner Did.
I’m in the middle of an escrow for the sale of a Duplex located at 2614-2616 Bravado, Rancho Cordova. I posted an article about it a couple of weeks ago and pitched it to a local investor along with other people in my data base.
The current owner paid about $146,500 in 2009 and really hasn’t done much to maintain it in the interim with the major exception of an Heating and Air unit about a year or so ago.
While this property started out at an asking price of $295,000 back in December the condition of this Duplex wouldn’t warrant an offer any where near that. I know the area very well, we manage several Duplexes in this neighborhood including one directly across the street. So I kept an eye on it and gradually the asking price came down to something decent at $275,000. We made an offer and started the process out at $270,000.
I have a theory that has pretty much held up over the years. If you ignore the curb appeal and don’t show pride of ownership, trust me the Tenants will pick up on that vibe and probably not take care of it either because if you don’t care about it…? why should they…?
When you maintain your property, inside and out you get the best possible tenants that will not only pay the rent on time but will take care of the property because they know you care about it. If they don’t, because you care, they know you will give them the appropriate “fix it” notice called a “3 day notice for covenants“. This owner did a poor job of managing this and it cost her.
In the initial walk through, we find out the tenants have dogs that are not permitted in their leases. Of course the back yards were a mess with lots of “dog droppings” that had not been picked up.
Not only that, the interiors were in poor shape with one kitchen having drawers that were falling apart.
After the Buyer had this Duplex inspected by North American Home Services for the Home & Pest Inspections along with a roof report from Eagle Ridge Construction, the only way he was going to move forward was to get a big drop in the price to make up for the deferred maintenance which included the need for a new roof.
The price we finally settled on is $245,000 “as is”. The existing tenants are; one on a month to month Section 8 which requires a 90 days notice to vacate if he wants her out and the other one we have to wait until this coming September to get possession because she’s on a lease. In the mean time, the rents are frozen in place for a period of time.
Here are pictures I got of the property – one that was taken by Google in Street View March 2015. Click on the picture and you’ll see how it looks from the street today just a year later.
I hope the conclusion that you come away with by reading this is when you don’t maintain and manage your rental property in a “professional manner” you will get lousy tenants, you will not get the highest possible rents and when you go to sell, you’ll have to lower your expectations “big time”.
The Buyer/Investor on this deal made a comment to me after he looked up the address where the people that own this property lived. He noticed it was in an upscale area. His comment was that it was amazing to him how poorly this Duplex looked but he bet where they lived looked a lot better.
Let me know what you think.
By the way… If you currently own rental properties and need management help, check out our Property Management Service that is “2nd to none” by Clicking Here
If you are thinking of Selling or you are interested in buying a Duplex, Fourplex or an Apartment complex in the area, please call/text or email me at anytime.
In the Mean Time…?
Make it a Great Day..!
Ed Favinger, Broker, CRS, GRI, SFR, CDPE firstname.lastname@example.org 916-203-1260