Navigating the real estate maze of New Orleans can be tricky. The market is a labyrinth of shifts, trends and definitions of "what's hot" that are as fleeting and malleable as the sediment under the city. But owing to the number of shotgun-style houses throughout the city -- and the fact that over the decades everything from Creole cottages to grandiose Georgian mansions have been sliced into multi-unit residences -- the first question many first-time homeowners face is: single or double?
Area Realtors suggest that the pick between a single or a double is largely a matter of economics, citing the fact that most young homeowners need the additional income of a double to afford the mortgage note. The note is offset in a double arrangement by the tenant's monthly rent check, with most landlords able to cover roughly 60 percent of the total note from the rental income, Realtors say.
The natural desire for privacy -- and the inherit satisfaction of the homestead ideal -- make the single-dwelling home preferable for most homeowners. But that dream doesn't always jibe with economic realities. Currently, many observers say that doubles are the hotter commodity.
"A double is always a good decision," says Realtor Lucie Vander Linden, owner of Benchmark Real Estate and an active agent in both Orleans and Jefferson parishes (who is also involved in property management). "The rental side can cover a lot of your mortgage. Anytime you're purchasing a property with a built-in income, it's an advantage.
"We're seeing a lot of people going for doubles right now, in the current economy," Vander Linden says. "In an unstable job market, if you lose your job and you're in a single, then three or four months down the line in your unemployment you're facing foreclosure. A double's income will give you much more security."
A single's primary draw is privacy, Vander Linden says. "People of course want privacy, they want space -- and that means buying a single," she says. "There are other factors, too. Some people don't want the hassle of collecting rent or making repairs. But if someone is looking for a house and is only looking at singles, from a financial standpoint, it would behoove them to look into a moderate double."
When approached by clients entering the housing market for the first time, Vander Linden first suggests they research the loan programs available through both local government and banks. This step helps first-time homeowners discover what they can afford to pay each month in their note, and how much they can produce for a down payment. Loans vary widely, she says.
But no matter if it's single or a double, Vander Linden says right now is a very good time to buy. "There's more money out there being lent now. And what's hot in real estate are older homes, and often they need work. If you buy a historic house, you might be looking at adding thousands to the price in terms of work you either need or desire. But with mortgage rates as low as they are, more people can afford to borrow more money and do that work.
"If it's a double, you can put money into the rental side and increase its value, and thus its income to you. The market right now is opening a lot of possibilities to people who before would not have been homeowners."
Peter Breen, a Baltimore native who has lived in New Orleans for five years, fits the profile of someone who may not have been a homeowner without the opportunities of low interest rates and the income assistance that a double provides. This fall, Breen purchased a home in the rapidly renovating Bywater. Like many, Breen faced the challenge of finding what he wanted -- with an income that is considerably less than that of older, established professionals who comprise much of the homeowner demographic.
Last summer, Breen and his girlfriend/roommate Jenny Tice were renting half of a shotgun house on Magazine Street near Audubon Park for $650 a month. The idea that he could afford to buy a home never entered his mind, Breen admits, until a friend made the home-ownership plunge, buying a two-story home in Broadmoor. When the friend explained how she was able to pay for a renovated $125,000 home through renting out the bottom floor to students for $800 a month, Breen "realized that it was a legitimate possibility, that I could afford to buy a house.
"Once I broke down the math, I saw no reason why I couldn't do it," Breen says. "I had known forever in the back of my mind that if I wanted to buy a house for that much ($125,000), I couldn't do it, because the mortgage was something I didn't feel comfortable committing to. But you almost have to pay that much, because anything less is going to be in a run-down part of town or be a house nobody wants.
"For me, it was double or nothing, no pun intended," he says.
Breen had heard that area banks and city agencies were offering loan incentives to offset the problems of blighted housing in New Orleans. He began to talk to several banks about what loans were available, what he could qualify for, and what program would work best for his situation.
One day, he was driving down Chartres Street, headed to lunch at Elizabeth's. The notion of the Bywater struck. He admits that living in the Bywater before that fateful drive never crossed his mind. However, Breen says, the Bywater proved to be a perfect fit. "I love all its amenities and the overall vibe," he says.
Breen eventually secured a renovator's loan from a local bank that would allow him financing to pay for needed work beyond the house's appraised value. He contacted a Realtor who specialized in Bywater properties -- a solid choice, Breen says, because he developed a relationship with the Realtor that aided a search for the perfect fit. After looking at several properties, Breen viewed his eventual home.
"It didn't really speak to us at first," Breen admits. "One half smelled like death, and it was all covered in aluminum siding, and there was growth pouring out of the roof, two things that could point to serious structural problems. But our Realtor told us to envision the finished product, and with that in mind, we made our decision."
His loan gave Breen a supply budget beyond the house's value to pay for renovation costs. He contracted out much of the wiring, plumbing and carpentry work, having to find workers who were insured in Orleans Parish. Even with his loan approved, Breen had to submit estimates of the work's cost to the bank before the renovation could begin. On top of all his workers, Breen, with the help of friends, labored for weeks at night and on weekends after his regular day job in what is referred to as "sweat equity" -- painting, caulking and general efforts to improve the house.
Breen managed to find a tenant through the want ads, an arrangement that covers 60 percent of the total note. He recommends a screening process that results in a tenant who is locally established with a stable employment history. A fly-by-night renter could leave without notice or be simply unable to pay, which would force the owner to cover the entire note until the space is rented again.
In the end, purchasing a double has worked well for Breen. "It's great living here," Breen says. "It was a gamble; a stressful process that I'm not real anxious to do again. But we got in at the right time. Houses all around us are being fixed up and sold, property values keep going up and up. It was definitely the right decision at the right time."
"I always recommend a double, especially for a new buyer," says Cathy Cashman, who partners closely with her husband for their venture Alex-Cate Realty, named for the couple's two daughters. Having recently worked in the markets of St. Bernard, Orleans and St. Tammany parishes, Cashman views the local real estate market as a boom, with Uptown and Lakeview particularly "hot" areas.
"I work with a lot of young people," Cashman says. "And I definitely recommend a double if they can afford it. There are just so many advantages. Later on, when the buyer has more money and is looking to upgrade, they can keep the double, rent out both sides and keep it as a profitable rental property. But the main factor is that added income from the rental side of a double allows a young person more cash for a more expensive property.
"Doubles are hard to come by in this market," Cashman says. "With the stock market performing poorly, people are looking for investments, and right now it's property."
In the end however, Cashman says the choice between a single or a double is "a personal choice."
"I recommend a potential buyer develop a close relationship with their Realtor," Cashman says. "That way, the Realtor can find what will work best for their needs. Some demand the privacy of a single, or they want their own yard, so they get a single. It just depends on the situation. It's a real personal decision."
- Many observers say that doubles are currently the hotter commodity in town. "A double is always a good decision," says Realtor Lucie Vander Linden.