Small multifamily that needs work but has existing tenants

[Andrew Myers]

To the BP community, what are the strategies out there around purchasing a small multi-family property (2-10 units) that needs work but has existing tenants?  Do you wait until the leases terms end before making improvements?  Break the leases (if possible), do the work, then re-lease?  I'm sure there are some legal considerations as well.  

Any insight and experience shared is very much appreciated!

[Theresa Harris]

You need to complete the leases.  Start by working on common areas as these will benefit everyone and as leases expire and you show the place to new tenants, it will help you rent the units.  

Don't rush to have the leases expire if the units are being rented at market value and you are cash flowing.  You don't want all the units vacant at the same time.  As units gradually become vacant, do the renovations and then list them for rent, presumably the rent will have increased.  This will also spread out the costs of the renos.

This only applies to renos, do any repairs right away as leaving them unattended to can cause more damage in the long run.