Updated:August 2026
Summary
- An income-producing property is a building owned by a single owner and made up of several rented residential units or commercial premises, generating regular rental income.
- Selling the property unit by unit generally results in a higher total sale price than selling the entire building in a single transaction, but it involves longer timescales and additional management for each individual unit.
- Before selling units separately, the building must first be legally converted into a co-ownership property (copropriété), requiring the preparation of co-ownership regulations and a descriptive statement of division.
- Existing tenants have a right of first refusal when their home is sold for the first time following the division of the building, which can extend the transaction timeline.
- Selling the entire building is particularly attractive to institutional investors and high-net-worth individuals looking for overall rental returns without the constraints associated with co-ownership.
- An experienced real estate advisor can be invaluable in coordinating the numerous legal, administrative, and commercial stages involved in selling a building unit by unit.
You own a building made up of several apartments that have been rented out for years, and you are wondering about the best way to sell it?
There are two main options: sell the entire building in a single transaction to one buyer (sale as a whole), or divide the building into separate units corresponding to each apartment and sell them individually, often to existing tenants or private investors (unit-by-unit sale).
This decision has significant consequences for the final sale price, the length of the process, and the administrative complexity involved.
Selling an income-producing property unit by unit is an increasingly common asset management strategy, particularly when owners want to maximise the value of their property before an inheritance, retirement, or reinvestment.
However, it requires compliance with a specific legal framework, particularly the prior conversion of the building into a co-ownership property and compliance with the rights of first refusal granted to existing tenants.
In this article, we explain what an income-producing property is, why some owners prefer selling unit by unit rather than as a whole, the practical steps involved in establishing co-ownership, the applicable right-of-first-refusal rules, and a numerical example comparing the two strategies.
We will also look at the types of investors who remain interested in purchasing an entire building and why professional support is particularly recommended for this type of transaction.
What Is an Income-Producing Property?
Definition and Characteristics
An income-producing property is a building owned in its entirety by a single owner—whether an individual, an SCI (Société Civile Immobilière), or a commercial company—and made up of several separate residential units or commercial premises that are rented out.
Unlike a co-owned building, where each apartment belongs to a different owner, an income-producing property legally remains a single asset: one title deed, one property tax bill, and centralised rental management.
This type of property is particularly attractive to investors looking to build or expand a rental property portfolio in a consolidated way, with the aim of generating an overall return from the entire building rather than assessing each unit individually.
The term leverage refers to the ability to finance a high-value property while using rental income to cover part of the loan repayments.
Why the Method of Sale Makes Such a Difference
An income-producing property can be sold in two fundamentally different ways:
- As a whole: the entire building is sold in a single transaction to one buyer, who takes over all existing leases.
- Unit by unit: each apartment or commercial unit is sold separately as an individual property, generally after the building has been legally divided into co-ownership units.
The choice between these two approaches depends on the seller's objectives—speed versus maximising value—the configuration of the building, including the number of units, its condition and the presence of tenants, as well as local market conditions.
It can be useful to consult Capifrance property listings to compare local prices for both entire buildings and individual apartments similar to those in your property.
Selling as a Whole or Unit by Unit: Advantages and Disadvantages
Advantages of Selling Unit by Unit
The main argument in favour of selling each unit separately is financial.
As a general rule, the combined sale prices of individual apartments are higher than the amount a single investor would be willing to pay for the entire building.
There are several reasons for this:
- The market of buyers looking for a primary residence or a small rental investment is much larger than the market of buyers capable of financing an entire building.
- An owner-occupier is often willing to pay a higher price per square metre than a professional investor, whose primary consideration is rental yield.
- Selling unit by unit allows each property to be valued individually according to its floor, orientation, size, or features such as a balcony, which is not possible when the building is sold as a whole.
Constraints to Consider
This higher potential valuation comes at a cost in terms of both time and complexity:
- A longer overall timeframe: every unit has to be sold individually, which may take several months or even several years for a large building, compared with a single completion when selling the building as a whole.
- Managing multiple transactions: each unit has its own preliminary sale agreement, financing arrangements, notarial process, property surveys, and negotiations. The owner therefore has to manage several transactions simultaneously.
- Upfront costs and formalities: establishing co-ownership involves expenses such as technical surveys, surveyor or property manager fees, and notarial costs for preparing the co-ownership regulations. These costs must be factored into the profitability of the operation.
- Compliance with tenants' rights of first refusal, which may delay the sale of certain occupied units.
Advantages and Limitations of Selling the Entire Buildind
Selling the building as a whole offers the major advantage of simplicity: a single transaction, a single deed, and generally a shorter timeframe, often only a few months between listing the property and completion.
It also avoids the costs involved in establishing co-ownership, since the building remains a single property.
However, the sale price is almost always lower than the combined value of the units if sold separately, as the buyer factors rental risk, potential renovation costs, and their own required return on investment into the offer.
Establishing Co-Ownership: A Mandatory Step Before Selling Unit by Unit
Why the Building Must Be Divided into Units
To sell each apartment in an income-producing property separately, the building must first be legally converted into a co-ownership property.
Without this division, the building legally constitutes a single property. It is therefore impossible to sell, for example, "the second-floor apartment" without selling the entire building.
This legal and administrative process is an essential preliminary step, regardless of the number of residential units involved.
The Co-Ownership Regulations
The co-ownership regulations (règlement de copropriété) govern how the future divided building will operate.
They specify, among other things:
- the permitted use of the building, such as residential, mixed-use, or commercial premises on the ground floor;
- the rules governing the use of private and common areas, such as cellars, gardens, and corridors;
- how service charges are divided between the co-owners according to each unit's share;
- how the future co-owners' association will operate, including general meetings and the appointment of a property manager (syndic).
This document is generally prepared by a notary or specialised professional in collaboration with a chartered surveyor and must be officially registered to become legally enforceable against future buyers.
The Descriptive Statement of Division
The descriptive statement of division (état descriptif de division or EDD) is the technical document that precisely identifies each unit within the building.
It specifies:
- the unit number;
- its description, such as an apartment, cellar, parking space, or attic;
- its surface area;
- its share of the common areas, known in France as tantièmes.
It is inseparable from the co-ownership regulations and provides the basis on which each unit can subsequently be sold independently, with its own unit number appearing in the future deed of sale.
The co-ownership regulations and descriptive statement of division must be established before the first individual unit is sold.
They are then registered with the French land registration service, making the division official and legally enforceable.
Surveys and Compliance
Alongside the legal division of the property, it is recommended—and in some cases mandatory depending on the age and size of the building—to carry out a global technical assessment of the condition of the common areas and equipment and identify any work that may be required.
Although this represents an additional cost, it helps secure the subsequent sale of each unit and reduces the risk of unpleasant surprises for both future buyers and the seller.
Tenants’ Right of First Refusal
A Protection Mechanism for Existing Tenants
When a tenant-occupied building is converted into co-ownership and then sold unit by unit, French law protects existing tenants by granting them a right of first refusal when their home is sold for the first time following the division.
In practical terms, before offering the unit to a third party, the owner must notify the tenant of their intention to sell, specifying the proposed sale price and conditions.
The tenant then has a specific period in which to exercise their priority right to purchase their home at the same price and under the same conditions as those offered to another potential buyer
Practical Consequences for the Seller
This right of first refusal has several practical implications that should be anticipated:
- A mandatory response period must be respected before the property can be sold to another buyer, extending the sales timeline for each occupied unit.
- Potential negotiations with the tenant: the tenant may be a natural buyer for the property, as they already know the home and do not need to search for another property.
- Strict notification requirements: the content and method of delivery must comply with specific formalities. It is strongly recommended to have the notification reviewed by a professional to avoid procedural errors that could jeopardise the sale.
This mechanism partly explains why selling an occupied building unit by unit generally takes longer than selling a vacant building: each occupied unit must go through the notification process before it can be offered on the open market.
Similar issues arise when selling tenanted commercial premises, where the presence of a tenant also has a significant impact on the transaction timeline and process.
Example: Selling the Entire Building vs. Selling Unit by Unit
To illustrate the potential difference in value between the two strategies, consider an income-producing property consisting of six rented apartments in a medium-sized town.
Scenario 1 – Selling the entire building: An institutional investor or high-net-worth individual, focused primarily on rental yield, offers a total price based on the current rental income, with a discount reflecting rental risk and any future renovation work.
For example, for a building generating approximately €45,000 in annual rental income, a buyer might offer around €550,000 to €600,000, corresponding to a gross yield considered attractive for this type of investment.
Scenario 2 – Selling unit by unit: After establishing co-ownership, each apartment is valued and sold separately to owner-occupiers or individual investors.
By combining the prices achieved for all six units—each valued according to its own market price, floor, orientation, and size—the total could reach €700,000 to €750,000, representing a potential increase of approximately 15% to 25% compared with selling the building as a whole.
However, this difference must be weighed against:
- the cost of establishing co-ownership, including surveys, notarial fees, and surveyor fees, which can amount to several thousand euros depending on the size of the building;
- the time required to sell all the units, which may range from 12 to 24 months depending on the number of apartments and local market conditions;
- ongoing management costs during the sales period, including charges, property tax, and any compliance work that may be required.
Before deciding, it can therefore be useful to obtain a free online property valuation for each scenario in order to objectively compare the two options based on prices in your local market.
Types of Investors Interested in Buying an Entire Building
Despite the discount generally associated with selling an income-producing property as a whole rather than unit by unit, this type of transaction remains attractive to several categories of investors:
- Institutional investors, such as property companies and real estate investment funds, looking for sizeable assets that can easily be incorporated into a centrally managed portfolio without multiplying individual transactions and co-ownership arrangements.
- High-net-worth individuals or experienced property investors, who favour leverage and the simplicity of managing a single asset rather than dealing with a co-ownership structure involving a property manager and shared charges.
- Property dealers, who purchase the entire building specifically to divide it into co-ownership units themselves and resell them individually, generating a margin through the division process. This approach is similar to the strategy adopted by developers planning major restructuring projects.
- Family SCIs, which may purchase an entire building as part of a long-term wealth transfer strategy without intending to resell it quickly.
Understanding these buyer profiles helps sellers more accurately assess the feasibility and potential benefits of selling the building as a whole compared with a unit-by-unit strategy.
This decision may also form part of a broader commercial property investment strategy where the building includes one or more commercial units on the ground floor in addition to residential apartments.
How to Organise a Unit-by-Unit Sale
Step 1: Carry Out a Preliminary Building Audit
Before making any decision, a complete assessment of the building should be carried out, including:
- the number of units;
- occupancy status, including existing tenants and vacant units;
- the condition of the building;
- current rental income;
- projected co-ownership charges.
This assessment makes it possible to estimate the potential value of each individual unit and objectively compare the two sales strategies.
Step 2: Establish Co-Ownership
As explained above, this involves preparing the co-ownership regulations and the descriptive statement of division before registering them.
This process generally takes several weeks to a few months, depending on the complexity of the building and the availability of the professionals involved, particularly the notary and surveyor.
Step 3: Notify Existing Tenants
For each occupied unit, the tenant's right-of-first-refusal notification procedure must be completed before the property can be offered to another buyer.
This stage should be incorporated into the overall timeline, as it determines when each unit can actually be placed on the open market.
Step 4: Market Each Unit Separately
Each apartment is then marketed independently, with its own surveys, asking price, and marketing strategy, including photographs, viewings, and negotiations.
Capifrance property listings can provide each unit with visibility among potential buyers, whether they are owner-occupiers or investors.
Step 5: Manage Each Transaction Through to Completion
Finally, several sales must be managed simultaneously, including preliminary sale agreements, financing, and notarial formalities, with different timelines for each unit.
This follow-up stage is often the most time-consuming part of the process for an owner managing the operation without professional assistance.
The Role of the Real Estate Advisor in a Unit-by-Unit Sale
Coordinating the unit-by-unit sale of an income-producing property involves managing numerous professionals, including the notary, surveyor, property diagnostician, and property manager, while simultaneously handling several transactions, each with its own timeline and buyers.
This is precisely where a local real estate advisor can provide significant added value. They can help determine the most appropriate strategy—selling the building as a whole or unit by unit—based on local market conditions, coordinate surveys and the establishment of co-ownership, ensure that tenant notification procedures are correctly followed, and manage the coordinated marketing of each unit to optimise the overall sale price while keeping the timeline under control.
Work with a Capifrance Real Estate Advisor
Selling an income-producing property unit by unit involves significant financial stakes as well as demanding legal requirements: establishing co-ownership, respecting tenants’ rights of first refusal, and managing several transactions simultaneously.
A local Capifrance real estate advisor understands the specific characteristics of your local market and can support you at every stage, from the initial audit of the building through to the completion of the final unit sale.
Drawing on a network of professional partners—including notaries, surveyors, and property diagnosticians—the advisor can help secure the entire process and identify the most profitable strategy for your situation.
Conclusion
- An income-producing property is a building owned by a single owner and made up of several rented units. It can be sold either as a whole or unit by unit.
- Selling unit by unit generally achieves a higher overall value than selling the entire building in a single transaction, but it requires more time and the management of several parallel transactions.
- Establishing co-ownership—including the co-ownership regulations and descriptive statement of division—is a mandatory legal step before units can be sold separately.
- Existing tenants benefit from a right of first refusal when their home is sold for the first time following the division of the building, and this must be factored into the expected sales timeline.
- Selling the building as a whole remains an attractive option for institutional investors, high-net-worth individuals, and property dealers looking for simpler management or an opportunity to divide the property themselves at a later stage.
- Working with a real estate advisor helps secure the transaction from a legal perspective and optimise the overall sale price, regardless of the strategy chosen.
Whether you are considering selling the entire building or selling it unit by unit, professional support remains one of the best ways to secure the transaction and maximise the value of your property.
FAQ
What Is the Difference Between an Income-Producing Property and a Co-Owned Building?
An income-producing property belongs to a single owner and legally constitutes one property, whereas a co-owned building is divided into separate units, each belonging to a different owner.
It is precisely this legal division that must be created before an income-producing property can be sold unit by unit.
Is Establishing Co-Ownership Always Mandatory Before Selling Unit by Unit?
Yes. Without legally dividing the building into separate units, each apartment cannot be sold individually because there is only one title deed for the entire property.
The co-ownership regulations and descriptive statement of division are therefore essential steps.
How Long Does It Take to Sell a Multi-Unit Building Unit by Unit?
There is no fixed timeframe.
The process generally takes several months and may extend over several years for a building containing numerous occupied units, particularly because of the time required to establish co-ownership and complete the tenant notification procedures.
Is a Tenant Required to Buy Their Home When They Have a Right of First Refusal?
No. The tenant is never required to purchase the property.
They simply have priority to buy their home under the same conditions offered to a third party. If they do not exercise this right within the specified period, the owner may sell the property to another buyer.
Can I Sell Some Units Individually and Keep Others as Rental Properties?
Yes. There is no requirement to sell all the units at the same time.
An owner may choose to sell certain apartments while retaining others as rental properties, depending on their wealth strategy and cash-flow requirements.
Is Selling the Entire Building Always Less Profitable?
Generally, yes. The total price achieved when selling the building as a whole is usually lower than the combined amount that could be obtained by selling each unit separately.
However, selling the entire building offers advantages in terms of speed, simplicity, and avoiding the costs associated with establishing co-ownership. Depending on the seller’s priorities, these benefits may compensate for the lower sale price.
Should I Carry Out Renovation Work Before Selling an Income-Producing Property Unit by Unit?
It depends on the condition of the building.
Renovation or compliance work in the common areas may increase the value of individual units and make them easier to sell. However, the cost of the work should be weighed against the expected increase in the overall sale price.
How Can I Determine Whether My Building Is Better Suited to a Sale as a Whole or Unit by Unit?
The decision depends on the number of units, their occupancy status, local market conditions, and your priorities—whether you favour a faster sale or maximising the overall value.
A detailed valuation, ideally carried out with a professional familiar with the local residential and commercial property market, can help you objectively compare the two options.
Author :
Frédéric Rémy – Director of Commercial Performance
A real estate professional for several years within the Capifrance network, I would like to share with you some essential advice to help you succeed in your real estate project with the support of our advisors.
