Some real estate investors choose to only invest in single families for flipping purposes while also only buying 2 families for long term rental income. This can be because there are a plethora of 2 families to choose from as compared to 3 & 4 families, but it can also be the fact that any properties with 3 or greater residential dwelling units will require recurring inspections from the state. The inspections take place no more than every 5 years, and once an inspection is passed the owner will be issued a “Green Card” from the state.
The best way to handle buying a 3+ family property is by requiring the seller to deliver a Green Card by time of closing. Once that is obtained you will know that everything is in compliance with the state and the only repairs/updates needed to be made in the future as required by the state will be your responsibility. If the seller is unwilling to provide the Green Card the next best option would be to require the seller to have an inspection done and provide the report with all needed inspection violations as noted by the state so that you know what will need to be done post closing and within what time frame.
Closing on a 3+ family property opens yourself up to risk as you would then be closing on the property without any knowledge of what the state is going to require from you as far as repairs. These requested repairs can range from simple items such as replacing smoke/carbon monoxide detectors to more serious and costly repairs such as installing/replacing fire escapes or replacing sidewalks. When buying your first 3+ family property do not forget to add a green card/green card violations list to your requested DD package. Contact us to find out how we can help you.