Best practice selling duplex

10 Replies

Im thinking seriously about selling a duplex in a c-b neighborhood.  My tenants are moving out on one side and I'm planning on doing a quickie fix-up ( floors, paint bathroom ect.).  Am I better off getting new tenants before listing or have it vacant for a potential owner live-in situation?  Thanks for your opinions.

Originally posted by @Nick Clurman :

Im thinking seriously about selling a duplex in a c-b neighborhood.  My tenants are moving out on one side and I'm planning on doing a quickie fix-up ( floors, paint bathroom ect.).  Am I better off getting new tenants before listing or have it vacant for a potential owner live-in situation?  Thanks for your opinions.

If the buyer is a newbie, income from day 1 is a good selling point.  But anyone who is experienced knows that it's only as good as the quality of the tenant you have in there. It takes time to get good tenants in B&C neighborhood.  Those tenants don't mean anything unless they have proven 5-6 months of history of paying on time and respecting the property. 

If I am the buyer, I'd much rather have the freedom to put in my own tenant than inherit someone. 

On the contrary, you can always explain how good business to proposition it is to get a vacant unit, even to a newbie. 

It depend on who your target buyer is and how you are pricing it.  If you are targeting an owner to live in one side then leave it vacant, if you are targeting just investors then you'll need to price it right for the income it brings in and it would be better to already have a tenant in there.

Vacant. That is a big selling point for an owner-occupant, who is the most-likely person to overpay. If I saw a listing with new tenants, I’d assume that they weren’t screened as carefully as I would since the seller doesn’t care if they go bad in a few months. 

Vacant. An owner-occupant is most likely to buy it in Sacramento and they'd prefer to move in and find their own tenant for the other side. Anytime I see investment properties with new tenants I assume there will be problems in the near future. 

Thanks for the great advice.  I am leaning towards vacant; 1 less thing for me to do, appeals to a broader array of buyers and way easier to show the propertey.   Along those lines it makes sense to do a more thorough and "higher-end" renovations, right?  I wouldnt normally consider putting in a dishwasher but maybe an owner/occupant would appreciate that kind of thing?

Originally posted by @Jeremy Brown :

Vacant. That is a big selling point for an owner-occupant, who is the most-likely person to overpay. If I saw a listing with new tenants, I’d assume that they weren’t screened as carefully as I would since the seller doesn’t care if they go bad in a few months. 

Originally posted by @Jeremy Brown :

Vacant. That is a big selling point for an owner-occupant, who is the most-likely person to overpay. If I saw a listing with new tenants, I’d assume that they weren’t screened as carefully as I would since the seller doesn’t care if they go bad in a few months. 

Thanks Jeremey.  That is the exact buyer I'm looking.  The one who is "most likely to overpay".

Yeah I bought a 4 Plex and was expected 2 of the units to be vacant.  A new tenant was moved in during our due diligence.  I got lucky that she is a neat freak and is paying on time.  She's the only one that doesn't pay online, but everything else has been positive.

Next time I'll make sure I put in my offer that it the vacant units are to remain vacant.

@Nick Clurman - it seems like pretty much anything will sell these days for top $$ in B neighborhoods in Sac county, so I'm not sure it's worth optimizing too much if the price is right

@Nick Clurman

Since you have the option, probably better to sell the property vacant so that the new owner can do their own screening. But be sure to advertise the property for rent after you renovate so you could actually provide some decent pro-forma figures and what the new rents could potentially be. 

Although, as others mentioned, sometimes you can pack the rental with under-qualified, yet able to pay higher rent tenants for the short term to make the property seem more valuable. Most inexperienced agents and buyers won't catch this, but it'll be a red flag to anyone who knows what they are doing.

If you're going to do higher-end renovations, do it because the property will show nicer, attract better quality tenants, and rent for more. That's what the buyer will care about, and I think it's far more likely to be an investor than an owner-occupant. Investors are all over Sacramento right now. And a dishwasher is a selling feature, both to owners and tenants, so I'd include it.

When it's ready let me know before it hits the market because I have lots of Bay Area investors looking in Sacramento who would love to get the early scoop on a deal. 

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