12 unit rehab that’s fully occupied

[Andrew Cook]

Good afternoon BiggerPockets community! I have my first MFR in contract it is 12 units that currently rent way under market for the area, but in order to get the rents to the comps in the area I need to rehab the units. The building is fully occupied as of right now and my question is as the new owner if I become that; what would you recommend for rehabbing the units? Do I rehab the ones when the current tenants lease ends and rinse and repeat? Or is it even possible to try and do them all at once? As the new owner I would assume I have to fulfill the obligation of the previous owners agreement to the renter? Or as the new owner am I able to give current tenants a notice and select new tenants once rehab is complete to meet my criteria? I’m new to the whole MFR investing so apologize if these are pretty standard “dumb” questions thanks in advance!

[Kim Meredith Hampton]

Andrew,

Congratulations!!  I too am working with an investor right now on a 12 unit. We too have units under market. We are going to tackle each one as the leases expire. By law, you must let the tenants live out there lease, unless you want to negotiate with them to get them out (hence cash for keys scenario). It’s best to have some cash flow while your doing your rehab. You can also tackle any exterior or roof repairs at any time while the units are occupied. 

Good luck