Purchasing Vacant Multifamily

[Russell W.]

I'm looking to buy an owner occupied 3 or 4 flat in Chicago. Of the properties I've visited with my realtor it seems that about half of those properties will be vacated at the time of the sale. As a full time real estate investor I could see this as an opportunity to do any rehab and select my own tenants right away, rather than inheriting someone elses. 

However, for a first time investor like myself, who doesn't have huge amounts of capital to float the bill for a few months while finding tenants, I see it as a daunting speed bump. What are your guys' thoughts on the situation? Is it still worth the risk? How quickly do you think the process could be to vet out potential tenants for the first time? Am I looking at paying the mortgage without the help of renters for a month? 2 months? 3?

Understandably each market is different in terms of demand for units, but just trying to get a basic idea of what I might be getting myself into. Any creative ways around this? Thanks for the help!

[Nnena O.]

I bought my first property (a duplex in Pittsburgh) three months ago.  I specifically looked for a property that was already rented.  My feeling was that, as a newbie, having a fully rented property would give me an opportunity to make repairs slowly, save some money, and beef up my emergency fund, without having to put much money out on the front end.

It's working well so far--I've not had to use any of my own funds, except to purchase the property.  I figure that after 6 months, I will have used the tenants money to make all the repairs that I need, and can start realizing the $500+ cash flow.  In addition, after a year, I would consider replacing the tenants, if necessary.

Doing it this way has also given me more time to learn about being a landlord and about how to screen for tenants.  BP has some great info about screening!  Based on what I have reading, I probably would have done it all wrong if I had tried to get tenants when I first bought the property.

Now that I know a little more about what I am doing, I can see myself purchasing an empty property and finding the tenants myself from the get-go.