Are no tenants a dangerous sign?
Member since 2024 · 10 posts · 3 votes
Are no tenants a dangerous sign?
Most Popular Reply
Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes@Huck Nguyen Am currently buying a vacant property. The sellers are in their 70s and just don’t want to be landlords anymore. They mostly renovated and only a few small things came up in the inspection.
Ask questions, get an inspection, and make sure it’s in a decent area where there are renters and that renters will want to live there.
26 Replies
- Lender · Chicago, IL · Member since 2021 · 424 posts · 145 votes2y
Quote from @Huck Nguyen:
I found a great multiplex (fourplex) in an upcoming area. It has value added potential as I can 2 more doors. However, it currently has no tenants. Is that a dangerous sign?
Just ask the current owner what the story is, and see if it passes the smell test.
Are there any active rentals in that area in similarly situated collateral?
- 2yManny VasquezBusiness MemberReal Estate Agent · Orange County · Member since 2022 · 318 posts · 293 votes
Ask the Seller or the Seller's agent why the property is vacant. Ask them if they know if the property has any known isuses...i.e., electrical, plumbing, foundation, etc. They may truly not know that the property has any issues or they may be playing "ignorant" of any issues. If you decide to proceed with the purchase, make sure you inspect the property very well, top to bottom.
.....OR.....
There may be NOTHING wrong the the property and the Seller wants to sell it vacant so that he gets top dollar. Here in California, Sellers that have sold their properties "vacant" get top dollar.
- 2yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Huck Nguyen Am currently buying a vacant property. The sellers are in their 70s and just don’t want to be landlords anymore. They mostly renovated and only a few small things came up in the inspection.
Ask questions, get an inspection, and make sure it’s in a decent area where there are renters and that renters will want to live there.
- 2yGregory SchwartzBusiness MemberRental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
This is how I analyze risks and make risk-adjusted return decisions:
Identify the Risk: Vacant units could be a sign of high vacancy rates.
Make Assumptions: Consider possible reasons like a tired landlord, property in rough condition, or a bad location.
Confirm Assumptions: Ask the seller and consult local experts (property managers and real estate agents).
Update Assumptions: Incorporate the new information.
Adjust Analysis: Integrate the updated information into your analysis. If the vacancy is due to location, you might require a higher ROI to compensate for the increased risk. Alternatively, you may need to factor in a larger repair budget to address the vacancy issue, effectively eliminating the risk.
Schwartz Realty Group5117 Reviews - Member since 2024 · 10 posts · 3 votes2y
Quote from @Alecia Loveless:
@Huck Nguyen Am currently buying a vacant property. The sellers are in their 70s and just don’t want to be landlords anymore. They mostly renovated and only a few small things came up in the inspection.
Ask questions, get an inspection, and make sure it’s in a decent area where there are renters and that renters will want to live there.
Thanks for the tips Alecia. I'm looking at Baytown, TX, and of course when I do research, all the websites say it's a growing area. No one really talks bad about it. Any other tips on how to determine if it's in demand and renters want to live there? Thx!
- Member since 2024 · 10 posts · 3 votes2y
Quote from @Gregory Schwartz:
This is how I analyze risks and make risk-adjusted return decisions:
Identify the Risk: Vacant units could be a sign of high vacancy rates.
Make Assumptions: Consider possible reasons like a tired landlord, property in rough condition, or a bad location.
Confirm Assumptions: Ask the seller and consult local experts (property managers and real estate agents).
Update Assumptions: Incorporate the new information.
Adjust Analysis: Integrate the updated information into your analysis. If the vacancy is due to location, you might require a higher ROI to compensate for the increased risk. Alternatively, you may need to factor in a larger repair budget to address the vacancy issue, effectively eliminating the risk.
Thanks for the tips, Gregory. Since you're in the Houston area, any thoughts on Baytown, TX? Thx!
- 2yGregory SchwartzBusiness MemberRental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
I'll be honest. I did a lot of research back in 2019 when I was deciding what market to invest in. I committed to Bryan / College Station and haven't look anywhere else since haha.
I had a buddy who invested in Orange because of the cashflow but he ultimately got out due to high vacancy rates and less than desirable appreciation.
Schwartz Realty Group5117 Reviews - Lender · Seattle, WA · Member since 2022 · 482 posts · 768 votes2y
Well it depends. The daunting thing could be zero rental income for x months. The good thing about not having any tenants on your new purchase, it allows you to do a full remodel of the property and raising it to market rents when you lease the units up.
- NJ · Member since 2024 · 207 posts · 91 votes2y
Quote from @Huck Nguyen:
Quote from @Alecia Loveless:
@Huck Nguyen Am currently buying a vacant property. The sellers are in their 70s and just don’t want to be landlords anymore. They mostly renovated and only a few small things came up in the inspection.
Ask questions, get an inspection, and make sure it’s in a decent area where there are renters and that renters will want to live there.
Thanks for the tips Alecia. I'm looking at Baytown, TX, and of course when I do research, all the websites say it's a growing area. No one really talks bad about it. Any other tips on how to determine if it's in demand and renters want to live there? Thx!
Hi Huck, Houston native here! Baytown is definitely up and coming - a lot of new builds and old builds being completely renovated. There's lots of factories/warehouses out there so heavy demand for rentals with the employment going on. I'd love to give you more insight if you want to PM me!
- Investor · Lowell, MA · Member since 2024 · 12 posts · 6 votes2y
It depends. If you know the neighborhood well and know it's not a neighborhood issue, it's most often just a result of poor management. High vacancy, lots of uncollected rent, high evictions, and long turnover times (as a result of slow turnover process or poor marketing/placement to fill vacancies) are very common results you'd expect from a bad property manager/landlord, which will lead to this "no tenants" issue. Usually these properties present the most opportunity though because you can quickly bring them up to par and rent them out for market rents (expediting your stabilization period) as opposed to waiting for turns to fix up and fill units. Unless its a perfectly turn key deal with market rate tenants, you'll actually have more control over a property upon closing with vacancies than if it had tenants. Hope this helps!
- 2yMelanie ThomasBusiness MemberReal Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 490 votes
In my opinion, it's not a cause for concern. Just ask the owner about the history of tenants and do your due diligence. Good luck & happy investing!
RentWerx Property Management4.73304 Reviews - Member since 2024 · 10 posts · 3 votes2y
Quote from @Brendan Conley:
It depends. If you know the neighborhood well and know it's not a neighborhood issue, it's most often just a result of poor management. High vacancy, lots of uncollected rent, high evictions, and long turnover times (as a result of slow turnover process or poor marketing/placement to fill vacancies) are very common results you'd expect from a bad property manager/landlord, which will lead to this "no tenants" issue. Usually these properties present the most opportunity though because you can quickly bring them up to par and rent them out for market rents (expediting your stabilization period) as opposed to waiting for turns to fix up and fill units. Unless its a perfectly turn key deal with market rate tenants, you'll actually have more control over a property upon closing with vacancies than if it had tenants. Hope this helps!
Ideally this would be the situation. (I guess it's better to build your mutliflex out rather than inherit with some bad tenants.) Obviously my fear is that there's no rental demand. I'll do more research. Thanks for the insight.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
- Member since 2024 · 10 posts · 3 votes2y
Quote from @V.G Jason:
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
Interesting. Thanks for the input. Is this out of personal experience or is this just based on observation of the marketplace? Thx.
- NJ · Member since 2024 · 207 posts · 91 votes2y
Quote from @V.G Jason:
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
Hi V.G.
I work in Business Development for a Property Management company over Greater Houston only and am first contact for Owners/Investors looking for management... I'm only answering based off our experience. I've personally had 4 Owners inquire in the past 2 days alone with Baytown properties - so to me, the rental market out there is up and coming compared to maybe 1 Owner inquiry a month with a property in that area at this time last year. I appreciate and value your input though, and am not saying it's the BEST market in all of Houston, by any means.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Huck Nguyen:
Quote from @V.G Jason:
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
Interesting. Thanks for the input. Is this out of personal experience or is this just based on observation of the marketplace? Thx.
Observation of the marketplace. I know the metro Houston very well. Heard some agents & PMs pitches, but really don't agree with their views given how intimate I am with this city among others. I know a few cities extremely, extremely well and learning some others.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Morgan Tondre:
Quote from @V.G Jason:
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
Hi V.G.
I work in Business Development for a Property Management company over Greater Houston only and am first contact for Owners/Investors looking for management... I'm only answering based off our experience. I've personally had 4 Owners inquire in the past 2 days alone with Baytown properties - so to me, the rental market out there is up and coming compared to maybe 1 Owner inquiry a month with a property in that area at this time last year. I appreciate and value your input though, and am not saying it's the BEST market in all of Houston, by any means.
Perhaps our definition of what constitutes up & coming differs. For me, it's population growth, business attraction, infrastructure growth--not 4 phone calls in 2 days versus 1 a month. It went from being not attractive at all to getting a little whiff. Color me still not interested.
Not to sound like a broken record, and repeat myself but read the last sentence on my first paragraph. It's why it's getting attention. It's cheap in a "Houston" metro, but it's cheap for a reason. You're better off saving more to afford better or investing differently than going into Baytown, that's just my opinion though. For the practicality of the OP's question, vacancy isn't an issue. Prefer it actually vacant.
- NJ · Member since 2024 · 207 posts · 91 votes2y
Quote from @V.G Jason:
Quote from @Morgan Tondre:
Quote from @V.G Jason:
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
Hi V.G.
I work in Business Development for a Property Management company over Greater Houston only and am first contact for Owners/Investors looking for management... I'm only answering based off our experience. I've personally had 4 Owners inquire in the past 2 days alone with Baytown properties - so to me, the rental market out there is up and coming compared to maybe 1 Owner inquiry a month with a property in that area at this time last year. I appreciate and value your input though, and am not saying it's the BEST market in all of Houston, by any means.
Perhaps our definition of what constitutes up & coming differs. For me, it's population growth, business attraction, infrastructure growth--not 4 phone calls in 2 days versus 1 a month. It went from being not attractive at all to getting a little whiff. Color me still not interested.
Not to sound like a broken record, and repeat myself but read the last sentence on my first paragraph. It's why it's getting attention. It's cheap in a "Houston" metro, but it's cheap for a reason. You're better off saving more to afford better or investing differently than going into Baytown, that's just my opinion though. For the practicality of the OP's question, vacancy isn't an issue. Prefer it actually vacant.
V.G. - Clearly you're at the top of your investment game, and congrats! Don't forget we're talking about a startup plan and for this member, he was already stating Baytown as an "upcoming" area because of his own research or information withheld, because it is not a bad area to start your portfolio. I agree you COULD be better off saving more for a better or different investment, but that wasn't the question. There has been population growth, business attraction, and infrastructure growth in the last year in Baytown, TX - nothing compared to maybe Katy, Cypress, or even Spring Branch - but still great growth. Again, I think we're in agreement just with different ideas!
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Morgan Tondre:
Quote from @V.G Jason:
Quote from @Morgan Tondre:
Quote from @V.G Jason:
Baytown is not Sunnyside, but it's a **** place. Wouldn't invest in that area, personally. But 99% of folks here strictly look at numbers and never realize why numbers fit even in such financial environments.
There's moderate demand for rentals, no reason to pause or concern yourself on why it's vacant. The real issue is just investing Baytown, it's not up and coming. I don't know who the heck says that besides one's selling something there.
Hi V.G.
I work in Business Development for a Property Management company over Greater Houston only and am first contact for Owners/Investors looking for management... I'm only answering based off our experience. I've personally had 4 Owners inquire in the past 2 days alone with Baytown properties - so to me, the rental market out there is up and coming compared to maybe 1 Owner inquiry a month with a property in that area at this time last year. I appreciate and value your input though, and am not saying it's the BEST market in all of Houston, by any means.
Perhaps our definition of what constitutes up & coming differs. For me, it's population growth, business attraction, infrastructure growth--not 4 phone calls in 2 days versus 1 a month. It went from being not attractive at all to getting a little whiff. Color me still not interested.
Not to sound like a broken record, and repeat myself but read the last sentence on my first paragraph. It's why it's getting attention. It's cheap in a "Houston" metro, but it's cheap for a reason. You're better off saving more to afford better or investing differently than going into Baytown, that's just my opinion though. For the practicality of the OP's question, vacancy isn't an issue. Prefer it actually vacant.
V.G. - Clearly you're at the top of your investment game, and congrats! Don't forget we're talking about a startup plan and for this member, he was already stating Baytown as an "upcoming" area because of his own research or information withheld, because it is not a bad area to start your portfolio. I agree you COULD be better off saving more for a better or different investment, but that wasn't the question. There has been population growth, business attraction, and infrastructure growth in the last year in Baytown, TX - nothing compared to maybe Katy, Cypress, or even Spring Branch - but still great growth. Again, I think we're in agreement just with different ideas!
Then, he should go to Katy, Cypress, or Spring Branch. With a Baytown budget I'd pick north of i10 in spring branch or even meyerland. This is for a "startup" investor. That's if we're thinking strictly Houston, but for such a budget I'd put that money in a diff city or diff investment vehicle. Same price point I'd be attacking San Antonio over Baytown, hand over first. Plus some other options.
We don't just invest for the sake of it-- make it a purpose. So my advice isn't just Baytown against itself, or Houston, as much as it is in general weighted against all options. This is one of the biggest cruxs of investors, the fear of missing out or just putting something on the table versus getting something really good. You'll not regret being diligent and practicing delayed gratification when the chickens come home to roost. Maybe I am too old, or experienced, or both to understand that.If you're a starting investor with limited means and trying to grow really amplify the quality the button and dial down the quantity game. That means no Baytown, and going elsewhere. Telling me how many you doors is just internet bravado, knowing how much primo land you have you'll be so quiet and have no needs to share. You'll just know you're doing it right.
Take the advice holistically not just Baytown specific. - Member since 2024 · 18 posts · 10 votes2y
Finding a great fourplex with potential is exciting, but be cautious. Research the area to ensure it's genuinely improving and check why the property is vacant—it could indicate issues or just an opportunity to add value. Get a thorough inspection to identify necessary repairs and calculate potential rental income versus costs. Make sure you have funds to cover expenses if finding tenants takes time. Develop a solid marketing plan to attract tenants post-renovation and consult real estate experts to better understand the property’s potential. These steps will help you decide if it's a sound investment.
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Huck Nguyen smells like an opportunity!
Logical Property Management4.9454 Reviews - 2yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
An empty fourplex in a good area can be a chance or a risk. Risks are low demand, the bad shape of the property, the area around it, past owner problems, law and zoning issues, and meeting local building codes. Chances are fixing it up, making it your own, better deal talks, and being able to change things. To check it out well, look into the market deep, get a pro to inspect, dive into the money details, ask local pros, and talk to a property lawyer. If market demand is strong and the property has solid value-added potential, it could be a worthwhile investment. However, if the area has low demand or the property has significant issues, proceed with caution or consider other options.
Thank you!
NETWORTH BUILDERS5236 Reviews
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