Hello all. I have my first multi-family under contract in Evansville, IN. Two of the four units are currently vacant.
My question is regarding filling the two vacant units before closing. Should I ask the seller to stop trying to fill the vacant units, or should I ask the seller to allow me to be involved with the tenant screening?
I would have them stop if the units aren't rent ready. Or at least just hold onto them for you until you close. That way you have a tenant pool list ready to rock.
I prefer to have a hand in screening because I have specific criteria for tenants.
If the units are in good condition and rent ready, I would make sure you have an agreement with the seller allowing you to approve any new tenants. if you don't think the current owner does a good job of screening, I'd leave vacant.
Great advice above, you don’t want the seller just putting someone in there right before you close just to “do you a favor” depending on where it is in Evansville you should be able to fill those pretty easy and I’d rather screen based on my criteria than someone that is exiting.
Assuming you know how and are experienced at screening stop him immediately from filling the units. He will not choose the tenants you would choose.
Looks like you already got a few replies. I can share from my experience, which you will probably notice won;t necessarily conclude in yay or nay. One multifamily I got, came in with 2 occupied units, tenants were paying what I call "recession rate rents" (what most people call under market rent). They have been both longterm tenants and been paying every single month with no hiccups. Another multifamily I got, the seller filled it up with tenants at market rate prior to the sale. They were not good tenants and within a year all broke their leases or were evicted. Then I bought another one that came mostly occupied. some of the tenants are again longterm recession rate tenants and some are market rate. some of them proved to be weak and incapable of paying and have since broke their leases and moved out, or were asked to be moved out by us.
Now on the flip side, those above mentioned properties, tenants placed by the property manager have been a hit or miss either. Some had to be evicted as well.
So you know, there is really no one straight answer. It depends on so many factors. If this is your first multifamily, how do you know that you have the experience to chose the best candidates? In my humble opinion, the best approaches are the "it depends" or "it varies" answers, that consider both sides of the equation.
Having said all that, if you could get involved and at least provide another perspective and there's no pushback from the seller, it probably wouldn't hurt.