Bed Bug Infestation in a multifamily property

Chicago, IL · Member since 2017 · 138 posts · 62 votes

I'm under contract for a fully occupied multifamily property in Chicago. I'm just learning that all the units have bed bugs. I have never dealt with bed bug before. How big of a problem is this. This is a 5 unit property. How can I remediate this problem while its tenant occupied?

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John Warren

Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes

@Jay Thomas the dirty little secret in multifamily is that almost all of the bigger buildings in C and D class areas are infested with roaches and bed bugs. Fun I know. I have dealt with bed bugs in every building I have purchased in Berwyn and Cicero, and I now am the proud owner of a set of bed bug heaters. When you are dealing with bed bugs in a multi-unit building, there is not easy way to get rid of them in one treatment. This will be a several month process to make sure they were eliminated. Even with heat treatment, we still do traditional treatments which involve spraying chemical barriers and also using Cymexa dust in wall cavities as a desiccant. We have our maintenance guys do this as a part of the process as most pest control companies will not be able to dedicate the time to doing it everywhere in a larger building.

Your tenants most likely will not cooperate, and the second dirty little secret is that one of them is the problem. No owner, property manager or landlord ever brought bed bugs to a building. You have a nasty tenant who you will want to remove, or the problem will come back again.

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Paul De Luca
Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
3y
@Jay Thomas

Was the seller aware of the problem already? And are they doing anything about the problem?

Since all of the units have bed bugs it sounds like a full blown infestation and not something to be taken lightly. I recommend meeting with 2-3 bed bug exterminators to get their opinions and quotes on treatment. And based on those quotes, maybe you can get the seller to give a credit if they're unwilling to do anything.

One of my units had a bed bug infestation and while it was unoccupied the exterminator did non-toxic chemical spraying which fixed the problem. Some exterminators may recommend heat treatment.

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Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y
Aloha,

Yes, you have a big problem. I agree with @Paul De Luca. Although I am not familiar with the Chicago market, just in general I have consistently been more successful and with less pain by using a local company rather than a National. Check with your local REI group.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Jay Thomas:

I'm under contract for a fully occupied multifamily property in Chicago. I'm just learning that all the units have bed bugs. I have never dealt with bed bug before. How big of a problem is this. This is a 5 unit property. How can I remediate this problem while its tenant occupied?

Negotiate extermination with the seller. It will require a professional treating the entire property at once.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Jay Thomas
It is a problem as you will typically have multiple treatments which could impact tenants and of course cost.
Depending on when you want to close you may want to hold by funds in escrow to pay for this - if so just make sure you have plenty of funds held, typiclaly 1.5x the cost of the work.
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Ray Hage
Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
3y
It is definitely a major enough of a problem that you will want to negotiate a credit with the seller (depending on. Generally it is expensive to treat and you might have tenants moving out and loss of rent. Personally, that is a terrible nightmare to have living in the house haha. You definitely will want to get a few estimates (I assume you know the square footage of each apt).
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Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
3y
Quote from @Jay Thomas:

I'm under contract for a fully occupied multifamily property in Chicago. I'm just learning that all the units have bed bugs. I have never dealt with bed bug before. How big of a problem is this. This is a 5 unit property. How can I remediate this problem while its tenant occupied?

If you go there and go into a unit, the bedbugs will get on you, in the seams of your clothes and in your shoes.
Then they will infest your car and when you go home, your home.
If you rent a car, it will be infested and so will your hotel room.
There are steps you can take to enter one of these units and remain sort of "Clean" wearing special clothing and following special procedures.
If you intend to enter a unit, it would be wise to know how to protect yourself, your car, your home and your family from this.
Good Luck!
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Allan C.
Rental Property Investor · Member since 2018 · 826 posts · 810 votes
3y
@Jay Thomas bed bugs in Chicago are a big deal for landlords with how CRLTO defines responsibility. Remediation costs ~$1k/unit and will take weeks to resolve, if everyone cooperates flawlessly. It can be resolved with tenants in units, but everyone needs to cooperate.
I say take $10-15k off purchase price for the cost and hassle of dealing with this.
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
3y
@Jay Thomas the dirty little secret in multifamily is that almost all of the bigger buildings in C and D class areas are infested with roaches and bed bugs. Fun I know. I have dealt with bed bugs in every building I have purchased in Berwyn and Cicero, and I now am the proud owner of a set of bed bug heaters. When you are dealing with bed bugs in a multi-unit building, there is not easy way to get rid of them in one treatment. This will be a several month process to make sure they were eliminated. Even with heat treatment, we still do traditional treatments which involve spraying chemical barriers and also using Cymexa dust in wall cavities as a desiccant. We have our maintenance guys do this as a part of the process as most pest control companies will not be able to dedicate the time to doing it everywhere in a larger building.
Your tenants most likely will not cooperate, and the second dirty little secret is that one of them is the problem. No owner, property manager or landlord ever brought bed bugs to a building. You have a nasty tenant who you will want to remove, or the problem will come back again.
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Jonathan KlemmBusiness Member
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Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
3y
Hey @jay @Jay Thomas - Sorry to hear about the bed bugs issue, but as you can tell from the comments above you are not alone and it can be fixed. These are good problems to have generally speaking because you are getting into bigger buildings....as time goes on it will just be a normal thing like it is for @John Warren.

It's not a one-time fix and the areas need to be isolated and then you need to figure out how to get those tenants out. What area of Chicago is the property in? I've got some good exterminators that I could recommend depending on the area.
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
3y
Quote from @Jay Thomas:

I'm under contract for a fully occupied multifamily property in Chicago. I'm just learning that all the units have bed bugs. I have never dealt with bed bug before. How big of a problem is this. This is a 5 unit property. How can I remediate this problem while its tenant occupied?

PLEASE hire a PM co, ,( if you are not aware how to handle this how are you going to handle real issues) Its not a big deal, TELL SELLER to get exterminated. Each tenant needs to get out for a full 24 hours, , Do it before you close, OR tell seller you want 5k off
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Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
3y
If seller disclosed it after signing the contract, I would try to hold the seller liable for remediating the bed bug infestation prior to closing. I would not take on that problem. Make sure to get proper invoices, call the company and confirm the work. I've had flippers scam me and my buyers by providing fake invoices of work they never actually did.
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Michael DiossaPro Member
Investor · RI · Member since 2023 · 191 posts · 163 votes
3y
Based on my experience, I have found that engaging the services of a skilled and meticulous exterminator who emphasizes the importance of tenant preparation can be an effective solution to pest problems.

It is worth noting that in instances where the extermination process has not yielded satisfactory results, the root cause is often linked to non-compliance by the tenant with the prescribed pest control protocols.
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Jay Thomas
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Chicago, IL · Member since 2017 · 138 posts · 62 votes
3y
Thanks everyone. Im just learning that sellers dont have to disclose on commercial multifamily properties (>4 unit). The seller knew of the problems but he is not required to disclosure. The build was presented a a turn key property since all units are fully rented (below market rent). At this point, we are back on the negotiation table. There are just to many deffered maintenance. It will be much easier if the building is vacant.
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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
3y
@Jay Thomas I wouldn't let a good deal walk away because of bed bugs. Now that you know about them, they become just like any other maintenance issue that comes up during an inspection. You can make sure that the seller has disclosed to all the of the tenants like he/she has to per the landlord tenant ordinance in Chicago....
Others have spoken about exterminators and having tenants exit the unit, etc. I have not had good success with tenants cooperating in C class rentals. In general, I have found that I need an exterminator that will come back three or four times in multi-unit buildings so we can be sure the issue is resolved. It is more of a property management function than anything, and once you find the source, you need to give them the 60 day or 120 day notice. You also might be able to issue a 10 day notice. This is where it gets complicated for sure.
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