Apartments for Low Income

Questions and Answers

Your Questions About Duplex Homes For Sale

August 20, 2013

Richard asks…

Is my home in foreclosure?

So I just moved into a duplex and signed a 12 mon lease. Today I was leaving for work and an appraiser came up to me telling me he was there for an appointment. I work in home mortgage so I kind of knew why he was there but I asked him. He told me the home is up for short sale and he was there for the 10am scheduled appraisal. ONE- my landlord did not inform me that the appraiser was coming, isnt he reqired to give me notice, my neighbor didnt know either. TWO – I know typically with a short sale the home is probably in foreclosure, is there a way for me to look that up? THREE – I just signed the lease, if the home is in foreclosure am I required to still pay rent, I live in Iowa. I really just need more information on how I can find out if the home is in foreclosure?

Administrator answers:

Your home may or may not be in foreclosure Very often a lender will allow the owner of a home try and do a short sale in the middle of the foreclosure process. There is a good chance that the lender is unaware that the seller is trying to do a short sale.

Since you have a 12 month lease a short sale buyer will have to honor your lease. If the property is foreclosed on the lender is required to give you at least 90 days after the final completion of the foreclosure to find another place to live. You are required to pay rent to the owner as long has he owns the property.

Most states require a 24 hours notice under normal circumstance, unless there is an emergency to inspect the property.

You can go to a title company and find out if a “Notice of Default” has been filed against the property…meaning the property is foreclosure.

Donald asks…

With the way the market is going are homebuyers interested in fixer-uppers?

I will be selling my home soon and it is a fixer-upper located in Western New Jersey.
The current asking prices in my town for half a duplex is $169k and up, townhomes $179 and up, single family homes are around $220k and up.
My home has 4BR and 2 Full Baths – - real estate listings comparable are starting at $249k.
I know the market is slowing. I am looking for a quick ‘as is’ sale and figure on setting my price at $135k ‘take it or leave it’. If I can’t get $135k then it will sit vacant while I move in with my mother (she can no longer be left alone).
Do you think I will have any luck selling knowing that people can pay more and have a perfect move-in condition place? Or am I priced low enough that people will see the benefits of a fixer-upper that may not be move-in condition but in the long run will cost far less than the move-in condition place?
I think the house needs about $30k to $40k worth of work and I just don’t have that amount of money to put into the house, a loan is not an option either (I took an equity loan to pay off some bills).
In addition, the house is far from my mother and driving back n forth to just mow the lawn is getting crazy (there are no neighborhood kids willing to mow a lawn these days).
I guess I am also willing to lose some $$$s to save on my time and aggravation.

Administrator answers:

You should be able to sell it quickly to a first time homebuyer wanting to fix it and live there. I will say that the days of flippers quickly snatching up fixer uppers is gone because the market can not sustain that any more since property values are decreasing in many cities. But it sounds like you’re being reasonable, I’d still consult a realtor, but I think you’ll be fine.

Helen asks…

I want to buy duplex for disabled family members, can I evict current tenants?

I want to make sure two family members with disabilities have permanent homes before I go into assistive living. I was looking at a duplex which would suit them well. However, it’s occupied by tenants with leases. I haven’t seen the leases yet. I had assumed that since the tenants knew the building was for sale, they’d be expecting to move, but now I realize that might not be the case. If I buy the duplex, I may not be able to move my family in because of the tenants. Is that right? The tenants would have the right to live there even though the lease was not with me? I’m not a callous person. I just thought the tenants would be looking for somewhere else and be ready to leave when the house sold. When I rented a house and it was sold, I had to move. I’ve been approved for the loan and have two disabled adults to place, but the house I want can’t be used by them if there are tenants? Does anyone know anything about buying leased duplexes? I need information fast!

Administrator answers:

In the majority of the states you would have to honor the lease until they expire, you can always ask if they are month to month which would mean no problem to get them out

if they are on a long term fixed lease, then you can always make your offer contingent on the current landlord buying out the tenants so they will leave by closing date, very common contingency but not one that is always accepted by the seller

Daniel asks…

Questions about buying a duplex with a friend?

Would like to know the best way (financially) to purchase a duplex with a friend – we would both occupy it (both sides), we both currently own separate homes and would sell them – both of us have excellent credit ratings and have owned/lived in our houses for more than 10 yrs.

We both want a lawyer involved to document many items (buy outs, in the event of death of one of us, etc) – just looking for ideas/advise on the best way to finance it – obviously both names would be on the note…

Also, just read a little about the “new” capital gains tax laws – is it true that as long as you’ve never used it before and the profit is under $250,000 (for singles) that you don’t have to claim it as income? If that’s the case, wouldn’t it be smarter to save the money from the sale of our houses and finance the entire selling price?

Any info/experiences would be helpful – thanks!!
Thanks TX Realtor – I did/still am doing my homework – just wanted to be sure that I was reading the 1997 Taxpayers Relief Act correctly that states the $250K(single)/$500K(married) “rule” was still the case – makes a huge difference…
I don’t understand what one of the answer-ers stated about HAVING to finance together….I realize there can only be one deed, but both names can appear as equal owners correct? Also, when making the downpayment decision, we wouldn’t think of paying PMI, so yes, 20% typically is the min to avoid that (but all is negotiable)
Tell me more about the owner occupied dual something or other you were speaking about….at least enough to do research – thanks!
Thanks to everyone for the thoughtful answers, just advise, try and quote accurately with sources WITHOUT being condescending…calling someone’s question(s)/thinking stupid is annoying and unecessary!

Thanks again!

Administrator answers:

UPDATE: Although Hollywood Melody made some statements, I believe she needs to check her sources.
From Kiplinger’s:
“When we sell our primary residence after owning and living in the residence for 24 months during the 60 months prior to the sale we can exclude from taxable income a maximum profits of $250,000 ($500,000 if married filing jointly and both meet the use test). We can do this every 24 months.”

IRS Pub 523 on page 9 under the heading of Maximum Exclusion, states:
“If you and another person owned the home jointly but file separate returns each of you can exclude up to $250,000 of the gain from the sale of your intrest in the home if each of you meet the three conditions listed above. Note that the ownership does not have to be 50/50 but could be 70/30, as each person is selling their intrest in the home.”

H.M. Referred to being careful about claiming Capital Gains tax…I believe she meant to say Capital Gains tax EXCLUSION.

Just goes to show that you need to research for yourself. Good intentions do not make for accurate information.
I take it you live in the US. You should check with a tax adviser, but my understanding is that if you sell your personal residence that you have lived in it at least 2 of the last 5 years, sales profit up to $250K (individual, $500K couple) is excluded from Capital Gains tax.

Now about purchasing a duplex. I suggest you and your friend meet with a lender to see how to best finance the purchase. Since you and your friend will be “owner occupying” both sides, you may be able to get financing that is for owner occupied properties. It may be that an FHA loan will work better for you (depending on price of duplex and your local FHA loan limits) with 3.5% down payment. You will have initial 1.75% and monthly MIP (for at least 5 years).

Otherwise, you may find that lenders will want at least 20% down for other loan programs. Some may ask for 30% because they see a duplex as typically a rental.

Good that you and your friend will be meeting with a lawyer to draw up documents spelling out your ownership agreement. It may be that you want to take fee simple ownership as Tenants in Common – I believe that way each of you has the right to will your share to heirs. Otherwise, ownership would probably be Joint Tenants w/right of survivorship – meaning if one dies, the other inherits the whole property. Be sure and let the Title Company know how you will take ownership.

I’m sure there are many other details that you will hammer out w/the lawyer. Repairs of common items like roof, foundation, utility service lines/pipes to the property, etc as well as regular maintenance items and property conditions should be addressed. If you are lucky, you will be able to find a suitable property where the individual units are mirror images, so there will be equal size/room/ownership distribution. It will make it easier if everything can just be divided 50-50.

Best to take care of this now, when you and your friend are on good terms and with a common purpose. Many times life has a way of changing our priorities and bad feelings can result. I hope that it works out for you both.

Good luck.

Sandy asks…

Preparing my rental properties for short sale.?

I have two rental properties that are going to be listed as short sales in the next few weeks. I live in one of the units (both are duplexes). I had originally planned to try to sell them, and do a short sale later if a sale did not work out. But the outlook on both is dismal. To add to that, neither are in “sale ready” condition – at least not for this competitive market. I have tried to do a few things to improve the appearance, but it is getting costly to keep putting money in it. I do still want to maintain the appearance tho as they are both rental properties and I need to keep them looking decent if only for the tenants and such. Any advice on how much to pour into a home that will be listed a short sale? Will I net any additional “profit” by getting them show ready? (not actual profit but perhaps a higher price/quicker) or is all this a waste of time?

Administrator answers:

A short sale means the owners (you) will sell the property for less than what is owed to the bank. For all intentions the only benefit to you is avoidance of foreclosure which will negatively impact your credit rating to an extent greater than a short sale. I wouldn’t put any money into the properties except to keep it safe for the tenants.

However, there are several inexpensive ‘curb appeal’ measures you could take to make the property more attractive to buyers at a higher, short sale price so the bank will be more likely to approve taking a loss.

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