I'm in a bit of a dilemma. I purchased a two family about a year and a half ago. I inherited the tenants above me and they just notified me that they are moving south so they will be out January 1. It is bad timing as I am closing on another multi-family on December 18 as an investment property. I want to get their unit ready/rented but would like suggestions on how other people have done it.
When I purchased the two family the units are livable but definitely need work. I redid my entire unit (minus bathroom since it was already done). Knocked down a wall to one of of the bedrooms to create an open concept kitchen/family room (changed the original family room to a bedroom), insulated those walls, drywall/plaster, new electrical (all knob and tube), moved plumbing in the kitchen, new kitchen, painted every room and sanded/stained the hardwoods.
Options for the unit the tenants are moving out of
1) Cosmetics (1 month - Rent out February 1 or sooner)
- Paint rooms
- Sand floors?
- Take out closet in the second floor hallway? Currently you cannot get a couch or box spring up the stairs. I think this would be a deterrent to rent. Has anyone else had this issue?
2) Renovate (2 months - Rent out March 1)
- New bathroom
- New kitchen/open floor plan and change current family room to a bedroom (I would not gut it to prevent costs of re-insulating (already blown-in), new electrical and extensive drywall/plaster work).
- Sand floors
3) I move upstairs and rent out the unit I'm currently in. I can start showing my unit now and get it rented before. I would get higher rents as I did it on the higher end side but I also like it/pain to move everything and do not want a tenant to ruin it. If I went this route I would likely redo the bathroom before I moved in and then gradually do everything else.
I appreciate any feedback. Thanks!
Man I like Option 3. That is the beauty of having a duplex isn't it? If you are young and single and don't have a wife that will despise you for making you live in a construction zone for a few months while you get everything up to speed, why not? Screen your tenants well and if the place is nice, you may not even have to worry about them screwing it up (nice people want to live in nice places!). If I had a duplex I would do that in a heartbeat.
I agree with Nathan.
It will def save you time and money in the long run because you are able to have a quick turnaround speeding up the time frame for the new tenants
Option 3 seems to be the most suitable. Saving time and money, nothing beats that.
@John Prunier Like the others, for an owner-occupant, I like option 3. This is basically what we did on our first property. We initially moved in downstairs, renovated it, when moved up. Most owners like living on the upper floor anyways, as it is quieter.
But if you way over improved the lower unit, you will need to consider that.
Plus, you could start showing your unit now, and maybe avoid having any lost rent. You can control how your unit shows, so there is no worry about potential tenants being turned off from an occupied unit (something I never do, as the current tenants almost always have the units furnished in an unappealing way).
I appreciate the feedback! I agree that option 3 makes the most sense. Just reluctant with all the work done I guess. I can also post it and see what happens.
1) Do you use Craigslist? I also read that many people use Postlets. Any feedback or other recommendations?
2) I was searching for some comparable units posted online. Not many that compare. How do you set your rental rates?
3) I've never done a lease as I just inherited my tenants. Do you recommend talking with a real estate lawyer to draft a lease? I think it makes the most sense to also have the lease renew either June 1 or September 1.
4) Any websites that you recommend for background/credit checks? Websites for autopay or do you have tenants transfer payment to your bank account? My current tenant writes checks but I would like to avoid this in the future.
@John Prunier I understand your concern. Our original house was a duplex and we renovated the upstairs unit to our specifications, which included a large custom marble walkin shower, high end cabinets, marble countertops, etc.
But then we wanted to move. That unit is nicer than all of the comps in the area, and we charge a bit more because of it. It shows really well in photos and in real life, so we never have any issues with renting it fast.
To address your questions;
1) We use both. I make my add in postlets and copy it to craigslist. Sometimes I find additional websites to list it on, but thats only after a unit is not getting the right calls. I also hang a for rent sign, but this is mainly so people that saw the internet post, can identify it if they choose to do a drive by. ALL of my calls that only come from the for rent sign are normally not going to make good tenants. My units are in B/C areas.
2) Cant help you there. Around me Craigslist is the place for rentals. I use it to gauge where the market rent is. You could also ride around and call the numbers on for rent signs. If you want to pay a fee, Realtor agents can handle the pricing and finding a tenant for your. If your owners unit is honestly much nicer than the comps, I would consider pricing in over what you are seeing for comps. For our old owners unit, market rent is ~$875, we rent it for $1000, to give you an idea.
3) I wrote my own lease, based on several free leases online. I adjusted to suit my needs. I am sure plenty of folks will tell you to get a lawyer, but that can cost a bit of money.
4) Smartmove is what I have used. It is powered by Transunion, and the applicant does everything, including paying. You get online access to the credit/background check for 30days I think. I also use an online rent payment service, rentpayment.com. There are lots out there, but I liked this one (mainly cause it was low cost and did not charge the tenant which I was afraid would cause adoption issues), and it fits my needs. I simple search online will yield good options.
@John Prunier I agree with the others on option 3. Not only can you minimize lost rent, you should be able to make more money with the increased rent due to your improvements.
Mike is spot on with posting your ad on Craigslist and Postlets. Postlets is now owned by Zillow so an ad there will syndicate it across multiple ad networks. The yard sign is also a good way to advertise to your neighbors that you have a unit available. You never know if they have friends that might be looking.
As for rents in your area and the lease agreement, you should look to see if you have a local landlord association near you. There are a couple of options in my area and I know that the landlords there are well versed in local ordinances and lease agreements. They could also help you price your unit competitively.
With your last point, I know BiggerPockets has a perk with TransUnion for credit/background checks so you can check that out here https://www.biggerpockets.com/perks. Feel free to ask me questions about online rent payments if you are still looking for help there.
Best of luck as you make the transition to new tenants in the New Year!