As Opposed to, “Income-Gushing Investment Property”

If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell.”

–Carl Sandburg’s advice for lawyers.

What do Realtors often mean when they tout a “For Sale” duplex or other multi-family property as “perfect for an owner-occupant?”

At least in my experience, one of the two following things:

One. The property and location are nicer than the typical rental (“investment”) property.

In fact, they’re so much nicer that the owner may want to consider living in one of the units themselves.

The flip side of that coin, however, is a tacit acknowledgement that . . .

Two. The investment return(s) may be sub-par.

Rents That “Could be Higher” 

Of course, there are really only two reasons to own any property: to enjoy it yourself, or, to make money from it, i.e., to earn an investment return.

In turn, there are two ways to profit from an investment property: cash flow/operating income (as in, “rent”); and capital appreciation.

If a duplex or a four-flex is a hand-over-fist moneymaker, the Seller usually plugs that (ask yourself, though: if it’s really so profitable . . . why are they selling??).

But what if it’s not?

Like the lawyer with bad facts who’s forced to argue the law, the Seller instead trumpets the psychic enjoyment the Buyer will derive from living there, while the renter(s) help pay the mortgage (and hopefully, the property appreciates) . . .

P.S.: Realtors selling investment property often suggest that, “the rents could be higher.”

Or, as a grizzled, too(?) experienced Realtor once deadpanned to me, “they could be lower . . .” 

See also, “Perfect for . . . Neither” (What Does That Leave?).”

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

Leave a Reply