A Duplex Property in Fort Lauderdale Quadruples in Value

A few years ago, I was involved in a real estate transaction in Fort Lauderdale, FL where we saw the benefits of homeownership not only for the property owner, but also his heirs. A gentleman who was in the process of selling the home in 2020 just before the pandemic started. He owned a duplex where he lived in one unit and rented the other unit to tenants. The tenants essentially helped him pay down the mortgage balance over the years. He originally purchased the property for $75,000 in 1996.

Some investors will rent out both units. He decided to live in one half of the duplex and take care of the property. Over the years, he had a few tenants. Those tenants paid rent which ultimately went towards his mortgage payments each month. Little by little, he paid down the mortgage balance.

At the time of our involvement in the transaction, a young couple was purchasing the property from him and were paying him $300,000 for this Broward County duplex. The young buyers decided to have the loan only under the wife's name as she earned enough income to qualify. She utilized FHA which allowed her to place a small down payment of 3.5% on a multi-unit. That's a great benefit of the FHA program as you're allowed to purchase a two, three or four unit property and place a small down payment as long as you intend to live in one of the units.

Just before the transaction was closing, the homeowner passed away. He had been suffering from COPD. While it was sad news, the buyer was ready to purchase the property. Due to the recent death of the homeowner, a probate attorney had to get involved. He had to determine the heirs and who would receive the money. Since the homeowner had seen his property quadruple in value since he purchased it, there was a good amount of equity.

After a few weeks, the probate attorney collected the information and obtained approval to proceed with the sale. It was determined that owner's son was going to inherit approximately $250,000 in proceeds from the sale of his late father's home.

If the homeowner would have rented, like his tenants had done over the years, there would have been no equity. Since the individual had the initiative to purchase a home, and not just any home, but a duplex property, it favored him and his family's financial future.

The $250,000 in equity did not appear overnight. It was the result of steady, patient ownership. The property’s value had grown over time. The mortgage balance had been steadily reduced, thanks in part to the rent collected from tenants. When the time came to sell the duplex, that difference between what he owed and what the buyers paid became equity that his family could inherit.

Of course, every situation is different. Not everyone wants the responsibility of managing tenants, and not every property will appreciate the same way this one did. But the core idea remains. When you purchase real estate, you are planting a seed. With time, that seed can grow into something much larger, and something that can provide security, opportunity and even a legacy.

This Fort Lauderdale duplex is just one example, but it’s a powerful one. For those considering to purchase a property now, you can read more about the average mortgage in Fort Lauderdale.

The man who bought it in 1996 may not have imagined that one day his decision would mean a quarter million dollars inheritance for his son. But that is exactly what happened. It all started with a choice to buy, rather than rent.

To learn more, please contact us to inquire about home loans and various financing options.