Owner-Occupant Multi-Family Sales

If you are an owner that currently occupies the multi-family property you plan to sell, a number of unique challenges can come up that can make your transaction complex. 

One frequent scenario is you have family members or a good friend staying with you. It goes something like this: 

You have the family triple decker and your daughter came back after college so she got one of the units and has been living rent free (or for way under market rent) for years. Then your adult brother had to move back to town and of course you would let him stay in the other unit for a few months, but now it’s been 3 years and it’s just sort of the way the cookie crumbled.

If this is you, it can be really awkward to tell your daughter and brother that you’re selling your multi-family property for over one million dollars and they will need to find a new place to live OR they can live with you but it could be an hour drive or a five hour flight away. 

Another common example I see with owner occupants is they more frequently get closer to their tenants. So even if you aren’t renting to a family member, there’s a natural tendency to get closer to the tenants since you are sharing the building and want to ensure good communication and positive relationships. 

On the surface that is a good thing. But sometimes the boundary can go from landlord-tenant to friendship and when that happens, these sort of conversations can become very challenging. Who wants to tell a friend that you are in fact selling your property for quite a bit of money and within 75 days they will need to find a new home? 

So what’s the solution here? I have found that a two-pronged approach can work well. First, the delivery is key and a great realtor should be able to help navigate this conversation. 

I recommend that instead of sending a text or email, make an effort to hop on a call. Prepare for the phone call with some notes and try telling them the truth (I know, novel!). Tell them you have decided it’s time for you to move for whatever reason - you want to retire, you want to be closer to your kids, you found a new job, it’s too much work, whatever the reason is. Most tenants understand, especially when you explain the reason why.

Then, and this is prong two here, try your best to give them a generous amount of time to figure out where they are going to go next. This will vary depending on their existing lease situation, but generally most tenants should have at least 60-90 days (as it takes a few weeks in most cases to prep a home for sale and the vast majority of transactions will take at least 60 days). 

If you can give them an even greater heads up, all the better. The more time your tenants have to figure out their next move, the less stressful the move will be for them AND the more goodwill you’ll have built.

Finally, end the call by letting them know your realtor will be in touch with them to go over WHAT will be happening and promise them that you will work with them to make the transaction as smooth as humanly possible.

And that’s it - if you keep it real, give them appropriate time, then pass the baton onto your real estate agent, you are maximizing your chances of a less stressful transaction. Of course, a great realtor should be an excellent communicator who can further set expectations and guide the transaction from beginning to end as smoothly as possible.