Buying a Multi-Family Home

Some important things to know about purchasing a Multi-Family Home....

There are several benefits and several liabilities with multi-family ownership.


•  The rent you charge can help with upkeep costs and mortgage payments.

•  The home can be a profitable investment.

•  Being a landlord gives a person a sense of accomplishment.

•  A multi-family home may allow an extended family to share the same residence.


•  Being a landlord requires commitment and responsibility.

•  There may be a lack of privacy in a multifamily home.

•  There may be tenant problems such as rent payments, occupancy issues, etc.

•  The landlord must conform with government and state rental regulations.

•  A possible lack of inventory from which to choose (there are fewer multi-family homes than single family homes).

•  Since many multi-family homes are older, they may require more maintenance than newer homes.

Prior to signing the Purchase and Sales document, the buyer should look into obtaining the following information:

Request Rent Roll information , which includes not only copies of the written tenancy agreements, but also of security deposit/last month's rent information and forms in the possession of the seller.

Have the seller serve notice to vacate to the tenants if the buyer will want an unoccupied building.  If the buyer wants to find their own tenants, it is very important to be sure that the units are vacated prior to closing.

Be sure that the building is in compliance with all local codes.  Refer to the State Sanitary Code 105 Code of Mass Regs 400.001 et. seq., to use as a home inspection guide.

Rental property owners in Massachusetts need to be particularly aware of several issues including lead paint;  it is important to hire an experienced and thorough home inspector.

Also, some units may have been originally designed as single family homes and have since been converted to rental units.  It is essential that all wiring, plumbing and heating systems are appropriate for each individual unit.

The home buyer must decide if they wish to retain the current tenants (if any) or find new tenants on their own.  Ideally this decision is made as early in the home buying process as possible.

The buyer should be sure to include in the offer to purchase a stipulation that the seller will not amend, extend, or create new tenancies prior to closing.

Also, it is important the seller be required to notify the buyer in the event the seller, prior to closing, receives any notice from tenants or the code department regarding potential violations.

The buyer should also request a timely delivery of written assignments of tenancy agreements and leases (such as section 8 leases) prior to closing.

If the buyer decides to retain the current tenant(s), the buyer should require the right to screen the tenants in the home to try and avoid incurring problematic tenancy issues.

The buyer should request that the seller fill out "Written statement of the present conditions of the apartment" to clarify the condition of the units at the closing.

Finally, the buyer should request an annual statement of security deposit interest and last month's rent interest and join the local property owner's association when appropriate.

A few items to keep in mind:

•  Viewing multi--family homes can present a challenge in itself.  This is due to conflicting schedules and potentially uncooperative tenants.

•  Plan on delays of closing if there are or may be tenants in the home and you require a vacant home at the closing.

•  Your bank or mortgage lender will be asking for financial statements from the seller as part of their commitment of the loan.

•  Make sure that there is a separate utility meter for the public areas of the units if applicable.

•  Become aware of the local provisions as well as state laws that regulate rental property.  Understand your rights and responsibilities as a landlord as well as the rights and responsibilities of your tenants.

•  Explain to tenants that many landlords' homeowners insurance policies cover only the physical structure of the unit(s) and not the material possessions inside; tenants are generally responsible for their own renter's insurance.

•  Work on drafting a rental agreement prior to interviewing tenant.  Be sure that this agreements clarifies such issues as rental amounts, due dates, procedure for increasing rental amounts, responsibilities of the tenants as well as the landlord, condition of the unit prior to rental, etc..

•  Identify professionals who will be available, if needed, to maintain the unit(s) -- plumbers, electricians, carpenters, etc..