How to Market a Duplex and Kick Your Image Up a Notch

We see it throughout our profession. From those coveted designations we display to the cars we drive. In real estate, image matters. It seems fitting, therefore, to offer a few ideas how those of you marketing duplexes and other multifamily properties can add a professional quality to your presentation, give your image an incredible boost, and help you avoid what some construe as the not-so-professional practice of simply “throwing it up against the wall hoping it sticks.” It begins with a correct concept about the investor. “An Investment Property Isn’t Home” Keep in mind that an investor buys an investment not a home, and amenities that might sell a house don’t necessarily sell a duplex. A home buyer has a natural regard for amenities that affect the family’s well-being. An investor on the other hand doesn’t generally occupy the property; therefore, other than how they might impact rents and rent-ability, it’s not the amenities, but the “bottom line” that matters most to the investor. So relegate the amenities to the more relevant issue. Or in the words of a client to whom I presented a very beautiful complex: “Jim, only women are beautiful. How much money does it make?” And that takes us to the next point. “How Much Money Does It Make?” Because all investment property stands or falls on its numbers, you naturally appear more professional to client and colleague alike when you present those numbers. The most common method would be to create an APOD (Annual Property Operating Data). Loosely defined as a “snapshot” of a property’s annual income and expenses, an APOD in fact offers a functional analysis significant to an investor. It states the Annual Cash Flow (the “bottom line”), and in the better reports, provides a computation for capitalization rate, gross rent multiplier, and other ratios commonly used as “rules-of-thumb.” To be effectual, though, the APOD must consist of numbers that mean something. And that leads us to the final point. “Use Meaningful Numbers” 1 Whenever possible, compute the annual income based upon the actual rents (otherwise, make it clear that the rents are “projections”). 2 Avoid the temptation to claim zero-vacancy; vacancy rate is a real and normal occurrence with investment property, so include one. 3 Use the seller’s Schedule E tax form to determine costs for Trash and Utilities; don’t guess; even worse, don’t omit them unless they don’t apply. 4 Whereas Property Management may not be relevant for a duplex, for larger properties (let’s say 8 units or more), make an allowance for it. 5 Compute a cost for Maintenance & Repairs and don’t use the seller’s figure. As it happens, repair amounts issued by sellers can be skewed with “non-recurring” costs (like a new fence), or “discounted” costs (when a seller makes the repairs himself, for example). 6 Finally, include an allowance for Replacement Reserves (a theoretical reserve set aside for the replacement of capitalized items like the roof). The appraiser subsequently includes it, so it’s smart to address it upfront and make yourself look good for anticipating it.