I am helping some family members prepare to sell a 4-plex in Denver, Colorado this Spring/Summer. They currently have 3 out of the 4 units rented to long term renters but they don't have lease agreements. They've been just going month to month. I assume getting the renters on new lease agreements will make it more attractive to buyers. Do you guys agree? Thank you!
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
8y
@Account Closed so no one really answered your question. The short answer is it depends. Personally I like MTM, then if a tenant doesn't suit me they get a notice of non-renewal. But that said, lenders like leases. If the units are at market rent, then leases are probably ok. Long term renters and market rents don't typically go together.
A newbie would like the leases because it gives them peace of mind. Seasoned landlords like MTM so they have control. If you think the property will sell to a newbie, get leases. If you think to a seasoned investor, status quo.
Highest prices are usually paid by newbies but if the property has some warts it can be really challenging to find a newbie who will pull the trigger.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
8y
@Account Closed so no one really answered your question. The short answer is it depends. Personally I like MTM, then if a tenant doesn't suit me they get a notice of non-renewal. But that said, lenders like leases. If the units are at market rent, then leases are probably ok. Long term renters and market rents don't typically go together.
A newbie would like the leases because it gives them peace of mind. Seasoned landlords like MTM so they have control. If you think the property will sell to a newbie, get leases. If you think to a seasoned investor, status quo.
Highest prices are usually paid by newbies but if the property has some warts it can be really challenging to find a newbie who will pull the trigger.
Lender · Denver, CO · Member since 2017 · 23 posts · 8 votes
8y
From a lender's point of view, Bill S nailed it. If the new buyer will need that income, get the leases. Market rent here is nuts, but it must be supported by rents in like properties.
Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
8y
Originally posted by @Account Closed:
I am helping some family members prepare to sell a 4-plex in Denver, Colorado this Spring/Summer. They currently have 3 out of the 4 units rented to long term renters but they don't have lease agreements. They've been just going month to month. I assume getting the renters on new lease agreements will make it more attractive to buyers. Do you guys agree? Thank you!
Investor · Aurora, CO · Member since 2013 · 55 posts · 13 votes
8y
An option could be list the property for sale with current MTM rents and in the broker remarks let agents know that you have the ability to convert MTM leases to longer term if given reasonable time to do so.
@Steven Silva I would definatly take this approach. In addition make sure you have all rents at full market before you list to insure you get the highest value from the sale. If this involves changing tenants give yourself time to locate new tenants that will pay market rates. Screen thoroughly and pass screening info along to new buyers. Do it by the book to reassure buyers you have good tenants, deposits, last month rents etc.
Doubtful you will hear of a new buyer complaining about inheriting tenants on M2M. Term leases on the other hand are often a major issue for new owners. Make sure you have copies of every tennats lease to pass along to th enew owner.
Definatly M2M when listing to allow buyer flexibility for option to house hack.
Real Estate Agent · Willoughby, OH · Member since 2014 · 560 posts · 690 votes
8y
Also, I would leave your one currently vacant unit as vacant. That will give you the ability to show it without disturbing the tenants until an offer is placed contingent on viewing the others. Plus, if someone wants to do an FHA loan and/or owner occupy the place, you already have one unit vacant. 3 out of 4 is perfect for selling.