I have a question for those that invest in multifamily, what contingencies would you ask for when purchasing an occupied 8 unit, what questions would you ask and what would make you withdraw your offer?
@Jennifer Mcclinton You should have a due-diligence period of about 21-30 days and then another 30 days or so to close to close. Have a contingency on due diligence and a financing contingency if possible. Its an 8 unit so it may not be a ton of competition to waive a financing contingency
As loose as possible, giving you as many options to walk away as possible. It will depend on how many offers the sellers is fielding. They may take a lesser offer if it has less contingencies, but, you should be real careful if you go there.
Remember it is a negotiation, so what might be a contingency on the first offer may be negotiated away in subsequent rounds of negotiation.
Usually, just having an inspection contingency will save you from any real material issues.
- Financing contingency
- Due diligence contingency (owner will allow buyer to view interior all units, allow the buyer to perform 3rd party inspections, provide rent rolls, leases, operating statements, bank statements and other pertinent financial documents up until closing in a prompt manner). (With large apts, the inspection period where you can get your emd back is usually 30 days and then you have 30 more days to close; but everything is negotiable.)
You can put something in there about the occupancy being maintained at a certain level or the seller isn't misrepresenting anything. But that is really covered by the due diligence contingency.
And then I like to put in a contingency that we can extend the closing 30 days by doubling the earnest money. Just in case something goes wrong with our financing or something like that and we still want to close, we don't have to worry about them just saying no.