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

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.