Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
I am finishing up rehabbing the last unit of a 3 plex in Omaha that I am planning to sell. Currently, all units are vacant, which obviously made it easier to rehab, and will be much easier for scheduling showings. I'd rather not go through the hassle of getting the units rented before selling, but I can/will if it makes a strong difference to potential buyers. Personally, I prefer to buy properties similar to the one I am selling when they are vacant because more often than not, inherited tenants aren't great.
But, I am curious to hear if others have opinions either way on whether or not they like a building occupied when buying. What say you?
A smaller property that is value-add, I'd prefer it to be vacant. If turnkey or buying as a rental, I'd be okay with tenants since there's less work to do up front and you've got someone in place that's paying. However, I typically dislike looking at properties with the tenants there. It's usually very uncomfortable for the tenant, but you can often find out valuable information that you wouldn't have gotten without having a conversation with them. When you're ready to sell this property, keep me in mind.
Hey Owen, I personally would prefer if they were all vacant. I'm looking to do short term rentals/house hack so long term tenants would make it much less appealing to me. Can you PM me more details about this triplex?
Can you send me the details on this? Would be interested in taking a look. I have no preference either way if tenants are in or if its vacant. Both have their pro's and con's. Sometimes your buyer pool is larger and it can be easier selling a rental property as "turn key" with tenants in place as long as they are well qualified tenants with proper background checks/credit checks. Plus its cash flow from day one for the new buyer.
A smaller property that is value-add, I'd prefer it to be vacant. If turnkey or buying as a rental, I'd be okay with tenants since there's less work to do up front and you've got someone in place that's paying. However, I typically dislike looking at properties with the tenants there. It's usually very uncomfortable for the tenant, but you can often find out valuable information that you wouldn't have gotten without having a conversation with them. When you're ready to sell this property, keep me in mind.
@Owen Dashner, I Guess it would depend on the buyer. Someone like me who has concentrated mostly on SFRs, it might be beneficial to have tenants already in place to help get acclimated to being a landlord of a multi family property. Unthinkable seasoned multi family owner on the other hand would like to pick their own tenants.
I prefer vacant since I operate in a pro tenant environment and evicting is extremely difficult. Inherited tenants are usually a pain. I prefer to screen my own tenants and hand pick to suite my personal requirements. I also do not trust landlords that place tenants just prior to sale. Guaranteed the only qualification was that they had a heart beat.
I am finishing up rehabbing the last unit of a 3 plex in Omaha that I am planning to sell. Currently, all units are vacant, which obviously made it easier to rehab, and will be much easier for scheduling showings. I'd rather not go through the hassle of getting the units rented before selling, but I can/will if it makes a strong difference to potential buyers. Personally, I prefer to buy properties similar to the one I am selling when they are vacant because more often than not, inherited tenants aren't great.
But, I am curious to hear if others have opinions either way on whether or not they like a building occupied when buying. What say you?
My personal preference is rent ready & vacant. Tenants can be & most often are pretty difficult. Sometimes though some properties that are rent ready tend to be a little less appealing to new buyers then ones with tenants already in there.
@James Wise, me too. Especially on a property of only 3 units. I have never had good luck with inherited tenants when buying smaller properties like this. I may have confirmation bias here, but I'd much rather take my time looking through a vacant property than rush through because tenants are home and it's awkward. I'd also rather use my PM's screening criteria to select tenants than to rely on existing leases and nonexistent screening criteria from the current owner.
Thanks everyone for the input, looks like there are some on both sides of the fence.
@Owen Dashner Having tenants in place will make it easier for investors to get financing since lenders will count the rental income if there is a lease in place.