Yesterday I looked at a 4 plex (first time looking at a 4 plex ever!), which currently has all units rented out. The property is in overall good shape. It has a new roof which was put on a few months ago, a brick exterior. And the windows seem to be in decent shape. Because of occupancy I was only able to see one of the units. I liked the unit we did see, but I'm worried about putting in an offer before I can see the rest of the units. Is this common practice?? Should I insist on seeing all of the units before I put in an offer?
I'm used to buying SFRs which need some fixing up, so I'm just thinking that they allowed us to see the best unit. I would hate to buy it and have to immediately stick money in, without my knowledge of anything being wrong. Any advice??
Under inspection require to see all the units. If the seller balks or makes up BS they are hiding something plain and simple.
Walk if they do not allow you to do due diligence or reduce your offer really low. Explain to the seller if you cannot verify condition and numbers then you have to assume the worst to be safe. If they start saying BS give them your card and say when they are willing to share the information give you a call.
Its customary in our market to get an offer accepted and the start due diligence time period including physical inspections. Its a courtesy to the tenants so they aren't being bothered with lookyloos. If you inspect and don't like what you see, make sure your contract allows your cancellation.
It's always best to be able to see them all. But it also depends on the deal.
I bought my 4 with only seeing one. But it was under priced for what it was, and I knew that I could raise rent significantly (almost double) so I went through it anyway.
Ended up having to replace a floor, but that was the only unforeseen expense. YMMV
that's common. i saw one complex and they were telling the tenants that i was an insurance guy looking at the units.
but i did not see all units. i would have put "xxx offer contingent on seeing all units"
Valerie - Just find an inspector you has knowledge with multifamily and let him do all the heavy lifting. Aside from the obvious things, they tend to look for specifics that the everyday purchaser will miss. If you can, I would advise going to the inspection as well just in case he misses anything. If I cant see all the units, I at least try to find out some info on them such as last renovation, any major repairs, and pics if possible.
This is a business, protect yourself and inspect your potential building thoroughly.
Yes, it is common practice to put in an offer before seeing all the units, but make sure your offer is contingent upon seeing all the units. Once your offer is accepted, I would view all the units and then if everything was good, I would then hire the inspection. As others have said, no way would you go through with the purchase where you haven't inspected all the units. No harm in getting it under contract as long as you have all the applicable contingenices in place. Your broker/RE agent should have explained this to you.
As many others in this thread have opined, it is my experience that often times you can only conduct a full inspection with an accepted offer. In California, most contracts will contain an inspection contingency which allows you to drop the deal if you are not satisfied with the condition. Depending on the market, many people will make their offer on the assumption that the units are in great shape and then attempt to lower the price following inspections because the units are not so hot.
If I had to make an offer without an inspection contingency - I would assume the units are disasters and need full mechanical and cosmetic upgrades in choosing my offer price.
Thanks for all of the responses! The realtor I met with kept saying we could only see the rest of the units after an accepted offer (I will never call him again he was terrible!). I called an agent that I'm familiar with and explained the situation. She is looking into it, and hopefully we'll be able to see the other three units. I am prepared to make an offer if we are not able to view the entire property, but it will be contingent upon a thorough inspection. If I'm not able to see the entire property before I put an offer in, it should be a low ball offer correct?? What would you do??
@Valerie Young Valerie thanks for posting on this issue. I am also interested in a few 4-plexes. If you see only one, it seems to me you have to presume you've seen the best one. I would suggest assuming the others aren't looking nearly as nice as the one you've seen. Please let us know how this works out and good luck!
The accepted offer issue is fine - because you will be making sure that you have a very strong inspection contingency in your offer that will give you plenty of time and excuse to bail if for any reason you see something you don't like in the other units. I have nearly every offer found items that caused me to request a price adjustment - and it's not like the seller doesn't expect that's an issue. Plus if you too heavily 'low-ball' you may never get to see the other units and then not have a deal at all. Come in with what you think is fair and then adjust if you see something you don't like.
Your offer price should have nothing to do with whether you can see the units before hand. Get the property under contract assuming they are just like the other unit. Once you view them, if they are not up to the standards of the other unit you saw, then either negotiate a lower price or back out. It is that simple. Just make sure your offer is contingent upon inspection and viewing all the units.
What if the property had 10 people thinking about making offers. You think if you were the owner, you would want to trudge people through your tenant's units 10 different times? No. That is why this is standard practice.
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