I have found a empty 6plex. According to the agent the owner has become tired of the property and is ready to retire soon. He had no tenant screening process no background checks and so on. I am assuming that he had tenants from hell and as leases came up for renewal he just did not renew. Now the place sits empty. There has been a price reduction of 21% (possible equity) to help move the complex. I have no other numbers on the property and am waiting to here back from the agent on those. If the numbers look good is it a good idea to purchase a completely empty complex?
Absolutely! That is, if the market is good. Leasing up is part of the job of property management. If you are already a landlord and experienced with property management, not a problem. If you knew how to do it yourself, you probably would not be asking this question. If you are not experienced in doing property management, consider hiring the services of a good property management company. They will be able to help you assess what improvements you may need to do, and what the units will rent for, as well as find suitable tenants. Whether you do it yourself or hire out, factor the cost of property management into your budget.
Are there a lot of other vacant properties around there? It could just be a matter of supply outstripping demand- in which case you probably don't want to be buying there. If it was really just bad management then you could be on to a good deal. Don't rely on the listing agent for info- you probably would want to get your own agent to represent you if you go ahead.
Also, be careful with your financial projections. I have a property that was 50% vacant when I bought it and it has take longer than I expected to fill it with decent tenants. Use some really conservative figures for vacancy for the first year or two
This is my first attempt a putting a deal together. I am budgeting for PM cost in my analytics. My wife and I will do the work of the PM. Until I get the expenses from the current owner I won't make a move. Thanks for you feedback.
I assume you have done your own evaluation based on low to mid range rents vs purchase price and it looks okay. Empty can be good for you if you need capital improvements that are inconvenient for a tenant like parking, roofing or electrical. Find out how long it has been empty. Also look into if there are violations or damages that made the building go vacant. A tired landlord can be a reason but it isn't the only reason a building is vacant. If you go for it, hit the ground running when the deal closes. You can really sink yourself with a slow rehab and lease up.
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