Thinking about purchasing a two unit property in Lowell, Ma that's within my budget (400k-500k). Toured it recently and it's in good shape other than some uneven floors from the foundation however the two long term tenants are paying 800 and 850 per month. The market rent is around 2000-2450 for 2 bed 1 baths in the area. I am confident that a light rehab could bring the rent up to just below market(1700-1900/mo) in order to make it cash flow but I'm not sure if this scenario is worth it. Could I make the sale contingent on the property being delivered vacant? Do I steer clear of something like this? Thanks
Well, it depends how hard it is to get the tenants gone in that locale, how long it takes to turn a unit and how long you can afford to be without tenants. You'll have to start over with new tenants as my experience says you're never going to get these tenants up to anywhere near market rates. If the seller is willing to deliver empty, that's probably your best bet. This will be a hard sell, however, as lots of things could make the deal go south and the seller isn't going to want to be without the income if it does. So you'll probably have to get them gone yourself after closing, which is where you need to know how easy/hard it is to do so.
Well, it depends how hard it is to get the tenants gone in that locale, how long it takes to turn a unit and how long you can afford to be without tenants. You'll have to start over with new tenants as my experience says you're never going to get these tenants up to anywhere near market rates. If the seller is willing to deliver empty, that's probably your best bet. This will be a hard sell, however, as lots of things could make the deal go south and the seller isn't going to want to be without the income if it does. So you'll probably have to get them gone yourself after closing, which is where you need to know how easy/hard it is to do so.
You can offer whatever you want. If there's a 12-month lease in place, it may not be possible for the owner to perform on that but you won't know unless you ask. From a seller's perspective they may be reluctant, in case the deal falls through and then they're stuck with no tenants. So you should be prepared to put up higher, non-refundable EM. Good luck
Before purchasing, you can and should look at the current leases that the tenants are under. If the leases are almost at the end of their term then you would have the flexibility to raise their rents or find new tenants.
It's never easy or fun to raise rents, but when they are this far below market you have to take advantage of the extra cash flow you can obtain.
Watertown realtor here, do a ton in Lowell. Stoked you found a 2-unit in your $400–500k range—nice! Those tenants at $800–850 are way below Lowell’s $2,000–2,450 market for 2-beds, and I feel you on whether a light rehab to hit $1,700–1,900 makes it worth it. Foundation’s a concern too. Here’s quick value on handling those low rents, based on my Lowell clients.
- Lowell Market: Your rehab plan’s solid—$1,700–1,900/unit is doable with basic updates (paint, flooring, fixtures). I’m seeing $1,800–2,100 rents post-rehab. Check that foundation tho—could cost $5–20k. What’s your reno budget?
- Tenant Strategies:
- Bump Rents Post-Rehab: Rehab, then pitch tenants $1,700–1,900 leases. My clients pull this off in Lowell, keeping tenants with nicer units. MA laws are strict, so check leases.
- Cash for Keys: Offer $2–4k to bounce. A client paid $3k, re-rented at $2,000, and made it back fast. Wanna talk how to do this?
- Vacant Contingency: Push for vacant delivery in your offer, but sellers might say no unless they’re eager. I’ve made it work for clients. Curious how to write it up?
- Worth It? At $450k + $20k rehab, $1,800/unit ($3,600/month) gives ~$2,500/month cash flow—7–8% return, decent for Lowell. If tenants stick at $800, it’s rough till you reset rents. Skip it if foundation’s a mess or tenants are locked in. A client flipped a Lowell 2-family like this, hit $2,000/unit after $15k rehab.
Sounds like you’re worried about tenants tanking the deal. If foundation’s cheap and you can reset rents in 6–12 months, it’s a winner. DM me to run numbers, sort tenant plans, or scope other Lowell deals—happy to chat! 🤙
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