In the 3rd part of my series on selling real estate with a tenant, let’s look at larger multi unit properties – those with 4 or more units. Once you have a property with more than 3 apartments, you are solidly in the land of investors. Owner occupants aren’t interested (and usually can’t afford) to buy larger multi unit properties. Banks will require a higher down payment as well. 25% of the purchase price is normally the minimum.
As far as your tenants, as long as they pay market rent and keep their apartments in reasonable condition, an investor will be happy to inherit the tenants with the sale. Hopefully you wrote provisions in your lease allowing you to show the apartments to prospective purchasers. Even if your tenants are tenants at will and go month to month without a longer term lease, it’s best to have a written tenancy at will agreement.
Of the 3 different “Selling with a Tenant” scenarios we talked about:
Selling a Condo
Selling a 2 or 3 family house
Selling a 4 unit or larger – this last scenario is the easiest at least as far as the tenants go. Since owner occupants won’t be a potential buyer, you don’t have to worry about your sale hinging on whether or not a tenant moves out when they are supposed to in order to satisfy the buyer’s bank’s requirement that they have a vacant unit to occupy. Your biggest hurdle in selling a larger investment property is ensuring that your buyer can secure financing.