Selling a rental property is very different from selling a home in which you live. What should you be aware of when buying or selling a rental property?
I have represented buyers and sellers for many investment properties in San Francisco – from condominiums and single-family homes to large apartment buildings. My number one rule in working with a tenant-occupied property is to meet the tenants. I want them to see me as a human and not just someone who is trying to get them kicked out of their home. In addition, I want to assure them that they will always have at least the minimum 24-hour notice before a showing and that if they have special events planned (such as a dinner party or birthday party), I will respect that and not show during those times.
I find demonstrating re-spect for tenants and their home goes a long way. One bit of advice I would have for tenants is to be sure that your apartment is picked up, shows well, and that you show cooperation. This makes a new landlord like you right off the bat, and he or she will be more inclined to want to keep you on as a tenant. If a new owner is planning to move in, or move in an immediate family member, that owner is more likely to choose the apartment of an uncooperative tenant. After all, it’s human nature to want and favor neighbors who are more cooperative.
Agents must respect rent control rules and regulations. We also must make sure that prospective buyers are made aware of these rules and regulations as they apply to San Francisco properties. Often tenants ask us what the new buyer has in mind for the building. We are not actually allowed to say; if we say one thing, that might imply a change in occupancy and if that does not later happen, we could be accused of “constructive eviction.” So if you are a tenant and ask a Realtor about the disposition of the property and don’t get an answer, please understand our hands are tied.
When I am about to put an income property on the market, one of the first things I get from the seller is the accurate income and expense numbers. This will provide key information for determining the property’s value and in the development of my marketing strategy and materials. In addition to the required disclosure items, I must also provide estoppels and protected tenant declarations for each tenant. These must be delivered to the tenants directly and registered with the rent control department. Getting these back from the tenants is time sensitive; tenants can wind up forfeiting rights they would have otherwise had if they don’t return documents within the prescribed timeframe.
Of course, as with all real estate transactions, inspections are very important. The property is not owner occupied, so the owner may not be aware of any physical issues. It is always advisable to get full inspections and to be present when the inspections take place. The written reports are good, but there is often verbal information given during the inspection that you don’t want to miss. It will also give you an opportunity to ask the inspectors any specific questions that you may have.
Rents are climbing in San Francisco, so there is more interest in investment property. Ironically, there is a lack of investment property on the market right now. If you are considering buying or selling a rental, be sure to contact a knowledgeable real estate professional to help you with the process. Income property can indeed be an excellent investment.