Tenant Occupied Multifamily Deal

[Shanice Waller]

What are some of the best questions to ask a seller with a tenant occupied unit? I know multifamily units are hard to come. However with cash flow it has to be a reason the owner is selling. Any advice for a newbie to help assess the deal better?

[Troy DeLong]

Hey Shanice, 

I'd say that most owners are selling right now because of the high prices. They wan't to cash out and run, or cash out and reinvest elsewhere. Just because they are selling doesn't mean it can't be a good deal. 

When dealing with tenant occupied properties, I'd say some questions to ask would be...

1) Are the tenants on a year lease or M2M (month to month)?

2) How long have the tenants been there? 

3) What utilities do the tenants pay for? Are the tenants in charge of lawn/snow? 

4) Are any pet fees included in their rent? (Some sellers include this and this can/will throw off your analysis when accounting for rents)

As always, make your offer 'contingent upon satisfactory review of all tenant leases'. If you come across a property that is already tenant occupied with quality, on-time paying tenants, it could be that the owner just doesn't want to manage the property anymore and they want to cash out. You'll just have to get on the phone and ask them... 

Hope this helps!