BUYING MULTI-FAMILY PROPERTY TIPS
Hello and welcome to this post! I’m excited you’re here and in this post I will provide tips, info and questions you should ask yourself when you are buying a multi-family property.
There are two different directions a buyer will be taking when buying a multifamily home:
- This is an investment purchase, but I will live in one of the units, or
- I am buying this as an investment property but a pure investment, meaning you I do not intend to move into the property at all.
Another question to answer is:
- I want to purchase the property with the tenant(s) remaining, or
- I want to purchase the property vacant.
Your Attorney and Realtor will need to help you with confirming that the property is zoned as a multi-family and that all of the rental units are legal.
Illegal Rentals: If you buy a property with a tenant in an illegal rental unit, if you proceed to evict them you need to provide 6 months rent relocation assistance by statute. That’s a really important question to get an answer to.
Three units or more: If the property has three legal rental units or more, the property needs to be registered with the State of New Jersey and inspected. The Seller will need to provide what’s called a green card. Your attorney can help you find this information.
With regards to the tenants, information you will need to know is:
- When did their leases end?
- What are they paying for rent?
- Are they paying rent or are they behind?
- Are they paying utilities?
- Do they have security deposits and have any of the tenants asked for their rent to be covered by their security deposit under Governor Murphy’s Law that he put into place during COVID-19. His emergency provision that allows tenants to ask the landlords to apply security towards rent. This doesn’t mean that you have bad tenants but it means that they are potentially suffering financially and they needed assistance with paying their rent and they decided to use their security deposit. Talk to your attorney about how you can go about seeking and replenishing the security deposit.
- Have the tenants ever been sent eviction notices?
- Has the landlord ever been sued by the tenants and what for?
- Have the tenants ever been sent notices of violations under the lease.
- If you are going to occupy a unit, you want to make sure that the current lease the tenant has aligns with your closing date.
There are so many other concerns, but these are some of the big ones to be aware of.
Getting answers to these questions requires everyone’s attention. Everyone’s got to come together to bring all of this information to the table.
I hope this article helps you get a better understanding of Buying a multifamily home! Thank you for reading.
This post is for educational purposes only and is not intended to be legal advice. No Attorney Client Relationship is formed by your reading of this article.