How Can I Market This 3-Plex the Elderly Owner Wouldn't Raise Rents On?

[Burt L.]

I put under contract a 3-plex today that has an out of state owner. The owner hasn't raised rents in six years - in a strong rental market. He also pays the utilities even though some already have separate metering, and has been taken advantage of by tenants consistently as they know he is older and lives out of state.

I would like to market the property at a price that supports the contract price he seeks, but forsee problems as the current rents dont support the price. Some of the tenants will need to be changed as they've taken advantage, brought in other people not on the Month to Month leases and the current owner doesn't like confrontation - which is what got him to this place.

How can I market a property based on projected rents? Most investors want a "turnkey" property to avoid the problems in raising rents, separating utility meters, and changing tenants that this landlord won't undertake either. He's a couple of good heartbeats short of 80, now.

[Matt Devincenzo]

How about some numbers to help out. What is your price that it is under contract for? What is it worth in a performing condition? Are there comps, or is it going to be something you have to value based on projected rents?

Let's assume for a minute that there are comps, that makes valuing easier, use those taking a significant discount to account for your buyer having to get rid of a bunch of poorly trained tenants.

If it's rent based that will be more difficult. it might be worth 100K performing but someone has to get it there so they rightfully are going to need to be compensated for that effort.

One thing that may sweeten the deal for a buyer to be willing to pay a little more, is see if he would offer owner financing. If so he could be out of the property, and a buyer might be willing to take the headache because of great terms.