Vacate units when buying multis?

Question

Howdy Folks,

I wanted to reach out to see how many folks that have purchased multi-family properties required in the offer that the units be vacant at close of escrow.

I realize that it all depends on the context. However, I have found that in recent transactions, this request is needed so that work can be done and rents can be brought up to the market level so that the property will even cash flow.

Stephanie P. · Answer

You can ask as part of the negotiation if it means that much to the transaction

Bob S. · Answer

Well now that makes a big difference, double . But ask the current will they pay market rent. Again if they are only 100- 200 less, keep them for the reasons I mentioned. Remember it make take months to get new ones.. Bird in the hand. In Cleveland you will not get much more rent going granite , crown moldings ect. MAYBE 50 bux, Not worth it. But hey, 1400 on a SF all in 60k in a nice area is not so bad :)

All the best to you

Sebastian Marroquin · Answer

If all you had to do was ask… that would be great! :)

The reality is that, the reason people are selling, most often is because of a problem: ie low rents, bad tenants, too many items to fix… etc

(yes, sometimes people just want to retire and move on or cash out… )

but that is not what happens most of the time.

If a property is selling for a lower than market price (below market): then you will have to slowly increase rents… that is the nature of the business.

If the rents are high enough to cash flow… then you will likely pay more for that property.

You have to be ready to buy the property with the tenants and then have a plan for a rent increase.

Most investors I have seen, increase the rents as much as they can every year, until the tenants self -select themselves out, once they vacate the home, then they can renovate and increase the rents.

Some, do cash for keys. But rarely do I see people getting a landlord to vacate the units during escrow for a sale.

Bob S. · Answer

if there are good tenants paying market rent why would you want them out? Even if there 100 or so less, so what, It will cost you 3, 4 5 6 7k to make them " nicer " its not worth the lost rent, leave them alone

Good Luck