How to Find and Buy a DUPLEX | (step-by-step)

what's going on guys this is Chandler Smith and buying a duplex is one of the best decisions that you can ever make however they can be very hard to find and so in this video I'm going to show you step by step everything you need to do to be able to find and buy the perfect duplex for you so with that being said let's jump into it alright guys for those of you that don't know me my name is Chandler Smith and I've been investing in real estate for the last seven years I own ninety nine units of rental real estate and eight of those units are because I've purchased four duplexes throughout that process and so in this video I want to show you everything that you need to do so that you're able to find the perfect duplex for you now guys just remember to smash that like button it really helps the algorithm and it would mean a lot to me I wanted to remind you that you have one week left to purchase my c.d.s real estate investing course at a huge discount a week from now about price is going to jump up and so if you're interested in jumping on that course the link for that is down in the description and I promise you this course is going to blow your mind I've made sure to put everything that you need in there to scale from no properties to owning over a hundred doors of rental real estate now with that being said keep in mind I'm still going to be blasting you with incredible content on my channel and so let's jump into everything you need to do to be able to purchase the perfect duplex first off you've got to make sure that you've gone in and gotten pre-approved for a loan and that you know what kind of loan you're going to need because if you're gonna live in this property it's gonna be different than if you're just buying a duplex to rent both units and so sit down and say alright am I going to live in it or am I not going to live in it how much am I going to put down and once you know the answers to those questions you're gonna go in and sit down with your loan officer and say alright here is my plan I'm going to purchase a duplex I'd like to get it for 5% down or three and a half percent down or 25% down and all of that's going to depend on whether you're going to live in it or not no I always suggest living in the property if you can because you're gonna be able to get into it for a much lower down payment this in turn is going to help you to get into a lot more real estate a lot more quickly however if you're already in the place you like living or that's not an option for you that is okay you just need to talk to your loan officer and make sure that you know exactly how much you need is a down payment and you need to know exactly what you're pre-approved for so that you're not shopping million-dollar properties when you're only approved for a $200,000 property that's gonna help you narrow in and know exactly what kind of duplex you're going to be looking for now at this point that's gonna get you a pre-approval letter from your lender this is going to play a huge role in you getting your offer accepted because then immediately you can send in your pre-approval letter and say look I'm already approved to buy this I can close quickly and I'm gonna be ready to go and so make sure you go in you get pre-approved you know how much you're pre-approved for and you know it's the right loan so that when the right deal does come you can jump all over it now if you don't know this already duplexes are extremely hard to find and the reason for that is everyone is competing for them and there's usually a pretty low barrier to entry and so you want to do a couple things that are gonna give you a real leg up on your competition one of the biggest things you can do is understand your market and be able to recognize if something is renting lower than it should be renting because if you can buy it when no one else is buying it but then raise rents you're in a great place you also on a deeper level want to understand what you could do to the property to force it being worth more so that you can raise rents so little renovations little fixes like carpet paint things like that figure out what you can do in your area to increase the value so you can raise rents and that will also help you pick up deals then maybe someone else would pass on so as you find ways to add value and increase rents you're going to be able to create deals that other people are passing on the next thing that's going to help you a ton to find deals that other people aren't finding is all of the different funnels that you create and in my course I talked about tons of different funnels and ways that can create deal flow however right here I'm gonna mention quite a few of them that you can do first off you can look on the MLS all right you're constantly looking on the MLS on Zillow on Craigslist on every platform that you can find and on a lot of those apps or websites you can make it so that it reminds you if a duplex hits the market the next thing you can do is build a relationship with multiple Realtors and wholesalers all right show them your numbers show them exactly what you're looking for and make sure you stay on the front of their mind constantly be following up and saying hey have you found that duplex for me yet and make sure you've got multiple people looking and that they know you're a serious investor that will buy the property if they bring it to you you also want to do everything you can to connect with as many people as you can go to real estate investor meetups post on facebook Instagram LinkedIn let the world know that you are an investor and you're looking for a duplex because if everyone knows and you're constantly talking about it with friends and family then when someone comes and says hey I've got this duplex I need a 1031 exchange or I need to sell they're going to think of you they're going to say hey I've got a friend or a buddy or a sibling that is looking for a duplex right now let me put you in contact with them because when you can find something that is off market then you don't have to deal with the competition then you can get them down a lot lower on the price and you can put yourself in a much better situation and a much higher likelihood of finding a deal that meets your criteria now there are tons of other ways to find deals but you just need to pour yourself into talking about real estate investing and specifically talking and following up with everyone you can about you trying to find that duplex now once you've done everything you can to create as many funnels as you can you also need to remember when you're talking to people and then when you're going through the process we have talked a lot about finding a property that meets your criteria and so let's dive into the number side of things so you know exactly what you're looking for and one of the best ways to do this is to hop on your App Store whether your Android or iOS and download my brand new app it's c.d.s rental calcula and I've given it away completely free it takes two seconds to download it doesn't take any of your private information but it is a great way to pull out your phone and be able to run quick numbers on a rental property especially on this dream duplex so once you've downloaded that app you're just gonna pull it out and I'm gonna show you how you're gonna run the numbers when I bought my first duplex my criteria was a 20% cash on cash return now since then I've lowered my criteria and I'm more than happy purchasing a 15% cash on cash return the reason I've lowered it is one I'm happy with that return but I also wanted to make sure that my numbers my expenses all of that were right so I'm gonna show you how I run those numbers but it might vary depending on your market and so make sure again that you've done that research to understand your market and what your expenses are what your vacancy is going to be all of that but this will show you exactly how to run the numbers and see what you're looking for on that cash on cash return so you can get comfortable purchasing a property and showing other people hey download this app these are the numbers I'm looking for if it meets this criteria I want to buy it and I found that to be super useful and that's why I made this that's why I gave it away for free as I want everyone to have access so that people can bring me deals and so that you can have a lot of luck finding the deals on your own so grab the app open it up and I'm gonna run the numbers like this is a turnkey property you just ready to go you got super lucky with the numbers and I'm actually going to show you the numbers on my very first duplex it was actually this guy so first we're gonna plug in the purchase price I was able to get them down to just $95,000 on this duplex so you're gonna plug in ninety five thousand dollars now for running the numbers if you're planning on living in the property and putting down a lower down payment you still want to run the numbers at a twenty five percent down payment and as if it already has two people in it that are paying because obviously you're going to get your rent for free you still want to plug in a twenty five percent down payment when you run the numbers to meet your criteria and the reason for that is it's going to dramatically change the numbers by putting a lower down payment and this is the criteria I use to make sure it's a good investment the lower down payment you put down usually the higher your returns going to get and so you don't want to buy something at only a 15% cash-on-cash return if you've only got three and a half percent down the other thing you want to do is you want to run the numbers as if two people are living in and renting both sides that way you know the numbers are correct rather than saying oh what are the numbers if I'm living in one side and someone else is living in the other now you still want to look into that and make sure it works for what you're wanting to buy but this helps you make sure that when you move out this is going to still be a great investment now buying a duplex is going to be an awesome investment even if the numbers don't work so you can change your criteria and the reason for that is you can literally have a place that you're living in and the you're owning and someone else is paying a portion or all of your mortgage now my goal is to get them to pay all of the mortgage and to maybe even still have a little cash flow even though you're living in the other side however you want to in a place where when you move out 100 percent you're getting at least a 15% cash on cash returns so we're gonna run the numbers as if you put 25% down so plug in 25% now remember you can plug in whatever you want you can plug in a lower down payment you can bounce back and forth plugging in the numbers and seeing what it does to return but for meeting your criteria this is how you want to do it now on closing costs I'm gonna pretend as if you're on a budget you're gonna do everything you can to try and get the closing cost for free so we're gonna run them just at zero now you're gonna put in 30 years to pay off and an interest rate of 3.5% now that should be very realistic however if it changes just plug in where you're at to run the numbers with this property I got super lucky because rents were at $1,200 so we're gonna plug in $1,200 and rents nothing on utilities and a vacancy of 6% now I'm very comfortable with this vacancy if you need more plug in more depending on your market then for maintenance you're gonna put 12 percent for management you're gonna put 7 percent or whatever you're at for insurance you're gonna plug in 3 24 in 1300 and then you're gonna press run numbers you can see on this property I'm coming in at a twenty three point eighteen percent return this was the first duplex I purchased and I got a killer deal on it it met my criteria and so I jumped all over it I personally think if you were fifteen percent or above as long as your numbers are right you are set if you're worried about your numbers and you still want to shoot for a twenty percent cash on cash return that is still fine it's gonna be harder to find those deals but it is a super safe investment for you to jump into if it's your first investment however if you know your expenses you know where things are at I think a fifteen percent cash on cash return is awesome and you should jump all over that as well for those of you that don't know what a cash on cash return is this percentage is showing you what percent return you're getting on the money you have into the property so it's taking your down payment and any closing costs or any fixes to make it rent ready and it's taking whatever return you're getting in rents per year on that money so you can see on this we had 25 percent down on the property and so on that 25 percent down we're getting a twenty three point one eight percent return which ends up being five thousand five hundred and four dollars every single year that you're making on your return you can see there's a ton of other cool stuff on here it shows your cap rate your debt service your cash flow your principal pay down and it has an amortization schedule where you can see how much is going out in your mortgage for principal and for interest every single month so you can play around with this app it is super useful but the point in this video I wanted to get to is once you know your criteria is met it is time to purchase the property once you know what criteria you're looking for you can share that with other people so they can help bring your properties but for me if I find a property that I know is going to meet this criteria I'm going to get it under contract as quickly as I can if I think I can add value I'm gonna get it under contract or if I think they will budge on the price because I'm gonna find things in the inspection I maybe already know about or I'm assuming or I think I can whittle them down after doing an inspection I'm gonna put in an offer because remember all of your offers you want to do dependent upon an inspection that way in your due diligence you can go through you can make sure your rents are going to work you can make sure your numbers are going to work and if they don't or if there's something wrong with the property after you've gotten a professional inspector to come look through it which you definitely should do on every property then you can go back to them and say I need this this and this fixed or you can give me this amount in closing now the reason I love getting an amount in closing is a lot of times some of the things that do need to be fixed don't need to be fixed until down the road and so you can really manipulate the numbers to get into an incredible deal and then break up those fixes to come out of your expenses and know that you are in a great deal so make sure you use that inspection and that due diligence period to your advantage but once you can get the numbers where they need to be once it's a clean property once you've done your inspection congratulations you can go through the closing process and get yourself your brand-new duplex and I promise you it is going to be an incredible cash cow now if you guys enjoyed this video remember to hit that like button and remember that my course is only on sale for another week you can hit the link in the description I promise you this course was created to help you go from no properties to over a hundred doors of rental real estate and six figures plus in passive income from your cash flow I put a ton of time into the course and I'm really excited for you to have it and have it at a discount now if you're watching this video later it's going to be worth whatever price it is at it is lights out right sorry the light wind but guys go check it out and remember hit that like button subscribe to the channel hit the little bell because my goal is to help you to build a huge passive income thanks so much guys have a great day [Music] you

Channel: Chandler David Smith

Views: 86,465

Keywords: graham stephan, real estate investing, biggerpockets, real estate for beginners, real estate for beginners 2020, real estate for beginners with no money, how to buy a duplex for investment, how to buy a duplex, how to buy a duplex and rent out half, how to buy a duplex with fha loan, how to buy a duplex to rent out, how to buy a duplex property, real estate investing 2020, real estate investing 101, duplex, duplex investment property, duplex investment strategy, buy a duplex

Id: K0NWciE_l3w

Length: 15min 27sec (927 seconds)

Published: Mon Jul 06 2020