Author Topic: Would you buy 1/2 of a duplex if it cash flowed really well?  (Read 1610 times)

FrugalSaver

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Would you buy 1/2 of a duplex if it cash flowed really well?
« on: February 12, 2017, 11:04:53 PM »
I have an option to buy 1/2 of two separate duplexes which means a different person owns the other half of each of these 2 duplexes.

The properties would cash flow really well and already have long term tenants in them. 

My concerns would be that any time we needed to replace a roof, for example, i can't simply replace the roof over the part of the duplex i own.  I'm sure there's a myriad of other issues I haven't even thought of.

If these cash flowed well, could you make the case that it makes sense to acquire these properties?  Bother are less than 10 years old in really good / A neighborhoods.

Drifterrider

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Re: Would you buy 1/2 of a duplex if it cash flowed really well?
« Reply #1 on: February 13, 2017, 06:13:25 AM »
I would never own 1/2 of a car, boat or house.  My half is always the one costing money.

radram

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Re: Would you buy 1/2 of a duplex if it cash flowed really well?
« Reply #2 on: February 13, 2017, 06:54:22 AM »
I have an option to buy 1/2 of two separate duplexes which means a different person owns the other half of each of these 2 duplexes.

The properties would cash flow really well and already have long term tenants in them. 

My concerns would be that any time we needed to replace a roof, for example, i can't simply replace the roof over the part of the duplex i own.  I'm sure there's a myriad of other issues I haven't even thought of.

If these cash flowed well, could you make the case that it makes sense to acquire these properties?  Bother are less than 10 years old in really good / A neighborhoods.

What is very important in this situation is that you do NOT consider your relationship with the owner of the half you will not own. If you think, it will be OK, because I get alone great with the person, you are setting yourself up for horror stories with the future nightmare owner.

I would not buy them without a written buy or sell of my half to the other owner. 

Since you are buying 2 half's, could you swap so you own one whole and the other owner owns half of the other one? 

Are both of the other halves owned by the same owner?

FrugalSaver

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Re: Would you buy 1/2 of a duplex if it cash flowed really well?
« Reply #3 on: February 13, 2017, 09:16:17 AM »
I have an option to buy 1/2 of two separate duplexes which means a different person owns the other half of each of these 2 duplexes.

The properties would cash flow really well and already have long term tenants in them. 

My concerns would be that any time we needed to replace a roof, for example, i can't simply replace the roof over the part of the duplex i own.  I'm sure there's a myriad of other issues I haven't even thought of.

If these cash flowed well, could you make the case that it makes sense to acquire these properties?  Bother are less than 10 years old in really good / A neighborhoods.

What is very important in this situation is that you do NOT consider your relationship with the owner of the half you will not own. If you think, it will be OK, because I get alone great with the person, you are setting yourself up for horror stories with the future nightmare owner.

I would not buy them without a written buy or sell of my half to the other owner. 

Since you are buying 2 half's, could you swap so you own one whole and the other owner owns half of the other one? 

Are both of the other halves owned by the same owner?
mmthe other halves are not owned by the same owner and I don't know the owner. Somewhere in the past two separate people bought each half.

I'm thinking it's a bad idea but posting here to see if I'm worried about nothing or being naive if I buy the half.

radram

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Re: Would you buy 1/2 of a duplex if it cash flowed really well?
« Reply #4 on: February 13, 2017, 02:16:43 PM »
I have an option to buy 1/2 of two separate duplexes which means a different person owns the other half of each of these 2 duplexes.

The properties would cash flow really well and already have long term tenants in them. 

My concerns would be that any time we needed to replace a roof, for example, i can't simply replace the roof over the part of the duplex i own.  I'm sure there's a myriad of other issues I haven't even thought of.

If these cash flowed well, could you make the case that it makes sense to acquire these properties?  Bother are less than 10 years old in really good / A neighborhoods.

What is very important in this situation is that you do NOT consider your relationship with the owner of the half you will not own. If you think, it will be OK, because I get alone great with the person, you are setting yourself up for horror stories with the future nightmare owner.

I would not buy them without a written buy or sell of my half to the other owner. 

Since you are buying 2 half's, could you swap so you own one whole and the other owner owns half of the other one? 

Are both of the other halves owned by the same owner?
mmthe other halves are not owned by the same owner and I don't know the owner. Somewhere in the past two separate people bought each half.

I'm thinking it's a bad idea but posting here to see if I'm worried about nothing or being naive if I buy the half.

You definitely are NOT worried about nothing.

Even if everything works perfectly for you, it will affect resale by driving some potential buyers away, like me for example. Less potential buyers means lower selling price.

Are you able to discover the owners in an attempt to do a swap?


I'm a red panda

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Re: Would you buy 1/2 of a duplex if it cash flowed really well?
« Reply #5 on: February 13, 2017, 02:23:04 PM »
I've owned 1/2 a zero-lot before (similar to a duplex, but there is a difference in the fire code here).

I would never do it again.

We had to repair the roof. It took us forever to get the other owner on board. We got a number of quotes; we picked a middle one with a company with a good reputation. The other owner refused. We settled on the low bid, really annoyed- but it HAD to be fixed.  Not long after a complete replacement, that company went out of business, and our roof started leaking again.

Well, the inspection showed major problems with the (just replaced- total tear off) roof. We ended up giving tour buyer a concession for a new roof a year after we fixed it.

We had a similar problem when the city needed us to fix the sidewalk- one of the sidewalk tiles spanned both properties.  Their owner was just going to pay the city to do the work (at 5x the cost of the person we hired).  We ended up having to get it permitted to split the sidewalk tile in half so we could repair our half.

Never, ever again.

GoBigRed

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Re: Would you buy 1/2 of a duplex if it cash flowed really well?
« Reply #6 on: February 14, 2017, 02:14:04 PM »
I would steer clear unless there was some sort of condo declaration or CC&Rs that governed each unit owner's obligations and prohibits certain actions.  I doubt there is any such documentation in place from the description you have provided. 

There are so many issues that can arise with owning only 1 unit of a duplex with no such governing documents.  I think some of the posts have already touched on the big items.  There are access issues, insurance issues, damage/casualty events, activities you want to prohibit or control and joint capital improvement costs. The list can go on.  You would really need some sort of agreement outlining all of this and recorded against the property.  You would also want capital reserves from each owner in the event of such joint expense, such as a roof, driveway, or sewer line needs repair.  Your roof example is a real issue and concern.  Also think about joint walls, driveways, sewer and other utilities that may be shared.

Also, I would be concerned on whether the proper means were taken to legally separate the two units of the duplex before they were sold.  This may be state specific, but unless a plat was done showing two separate units of the duplex, you can't really just sell half of the duplex.  If you ever purchase a condo, take a look at the description of what constitutes the "unit."  It is pretty much anything in the interior walls.  Anything outside traditionally belongs to the association as a common element or limited common element.     If there is any type of a yard or driveway, who owns that?  Or are they separated as to each unit?  Does each unit have a separate tax parcel identification number?

If there was proper legal documents in place, it could be very similar to owning a condo or townhome, but sounds as though this is not the case.   I have seen several condos/HOAs with less than 4 units, so it is possible someone went through the hassle of doing it right, but highly doubt so in your instance.