touring our first four properties... and I have questions
Rental Property Investor · Bethalto, IL · Member since 2014 · 319 posts · 103 votes
Happy Friday everyone! So tomorrow we are touring our first four potential investment properties. What are some good questions we should be asking the owners? How long units have been vacant, how long other units leases are. i have driven past all four multiple times. We are looking at 2 4-plex, a duplex, and a sfr. Also....one of the 4plex is owned by the agent, and been for sale nearly two years. Inside of it looks great. It is half brick half siding....definitely needs new sighting. I really like this property but the asking price is a bit high for our first purchase. The price is understandable for this property but the 20% down will use up about 75% of our starting capital. How do you recommend I mention the seller carrying the second for the down payment or a portion of it? Being owned by a fairly large group of family realators, what are the chances they would agree to that? Any suggestions are appreciated! !
dj cummins
I won't even go look at anything listed by Eichelberger Realty. They own enough of their own properties and also rehab that anything they are selling is complete junk. There is another agency that I've seen list their own multis, GI International or something like that, and they have all been junk. I'm not even sure how they ever passed the low bar of occupancy inspection they were that bad. So buyer beware with realtor owned multis. That said, I have a friend who is a Realtor that has sold some of her own properties that have been good buildings.
Skipping the obvious, I always make sure to check out the following:
None of these are a basis to walk away from a deal but are some of the bigger things to look for which aren't as obvious as vinyl tile peeling. I would rather spend $10k on a new kitchen and bath than tuckpointing and a sewer line. One adds huge value and one basically offers none.
Will you be meeting with the owners to talk with them? I can already tell you the vacancy answer: "Not long as they're easy to rent" or "I'm just keeping it vacant to show". Just stick with facts, ask about age of roof, furnace, ac and copies of leases. Confirm the condition yourself. Nothing else will really matter coming from someone who has an interest in selling you the property. The expenses and maintenance will always be "Low", trust me.
A question for you: What special knowledge or skills do you have that everybody else who has looked for an investment property in St. Louis over the last 2 years lack? Maybe they just lowered the price but the multis I've been watching have been going under contract within a week or two of hitting the market lately.
I'd be skeptical buying properties owned by realtors. If they are really good investments, I'd think they'd want to hold on to them. I'd look at what similar properties are listed for nearby if you haven't already.
I'm seeing homes in Saint Louis, MO listed for 5k or less and homes in Alton, IL listed for 15k or less which is probably where I'd put my money.
I am looking for a better place to invest. There are a couple nice areas in alton but those cheap properties are on streets that arent safe to drive down, let alone live on. Thank you for looking into it though!
I won't even go look at anything listed by Eichelberger Realty. They own enough of their own properties and also rehab that anything they are selling is complete junk. There is another agency that I've seen list their own multis, GI International or something like that, and they have all been junk. I'm not even sure how they ever passed the low bar of occupancy inspection they were that bad. So buyer beware with realtor owned multis. That said, I have a friend who is a Realtor that has sold some of her own properties that have been good buildings.
Skipping the obvious, I always make sure to check out the following:
None of these are a basis to walk away from a deal but are some of the bigger things to look for which aren't as obvious as vinyl tile peeling. I would rather spend $10k on a new kitchen and bath than tuckpointing and a sewer line. One adds huge value and one basically offers none.
Will you be meeting with the owners to talk with them? I can already tell you the vacancy answer: "Not long as they're easy to rent" or "I'm just keeping it vacant to show". Just stick with facts, ask about age of roof, furnace, ac and copies of leases. Confirm the condition yourself. Nothing else will really matter coming from someone who has an interest in selling you the property. The expenses and maintenance will always be "Low", trust me.
A question for you: What special knowledge or skills do you have that everybody else who has looked for an investment property in St. Louis over the last 2 years lack? Maybe they just lowered the price but the multis I've been watching have been going under contract within a week or two of hitting the market lately.
Realtors have the same reasons for selling as everyone else. They may have just gotten the property at a good price and are ready to get their money out to deploy somewhere else. No need to overthink it. As far as terms, you don't know what they will or won't consider without asking. If you want the place and can come to terms, great. If not, move on. You are far less likely to get "drama" over an offer from a realtor seller than you are from a regular seller, IMO.
@Bob Hines great info. Thank you for all of that. I am actually on the illinois side of the river. I am sure our market is much slower than in the city.
@Jean Bolger good call..thank you!
@DJ Cummins Realtors and MFH owners are likely to overinflate their revenue and occupancy rates, while decreasing their actual expenses. Anything to bump up the property's perceived ROI! Definitely require documentation of all claims to protect both yourself and your investment.
Asking the seller if the building is "OK", or the condition of the neighborhood is not very useful. They have the incentive to say that things are good , sale price is reasonable and units are occupied all the time.
This part is something you kind of have to research on your own.
Rentometer, Rentjungle and craigslist are good source to find average rent around the area. Craigslist is good because it shows current rate.
Something important to ask is whether they have all the leases/rental agreement properly documented for all their tenants. Stay away from any verbal agreements. Also good to know if they follow local rent control ordinances if applicable.
Price wise, check if current monthly rent/ projected rent is at least 1% of the sales price. Anything lower than that is not worth the trouble.
I just re-read and I'm a bit hesitant to speak absolutely, but if these are your first 4 investment properties you are looking at tomorrow-DO NOT PLAN ON WRITING A CONTRACT ON ANY OF THEM. Know that going in. Especially since you are looking at four families, a duplex and a SFR. I guarantee you, one of them will be the best that you look at tomorrow :-) But how do you know how they stack up against the rest of the market? You need to look at lots of properties to get a feel for what is and is not a deal. Have your agent put you on the MLS email list to get updates and watch what sells and for what prices. I will go out and look at 20 properties in a weekend for months and not find anything to make an offer on. And I've also called my agent up to go look at 1 property after work in the dark and written a contract on the spot. The odds that you are the latter on your first time out is slim. It could be a great deal, but with a sample size so small, it will be hard to tell. And reading your other posts about buying friends houses, I would caution you not to jump in too fast. It would be better to look at more properties and come back to it later if it's proven to be a good deal. It's easier to make up opportunities than losses.
I have a coworker who lives in Bethalto and drives to Clayton every day. It's not that bad of a drive if you would want to expand the area you are looking at to include the city or county over here. I hear her complain about her property taxes being high in IL. Might want to compare to MO. This link will get you tax and ownership info for the City Geo St. LouisThe county has a website with the same information but I only have the city's as that is where I invest.
@Bob Hines , sigh. I wish I had seen your statement earlier. I currently just closed on a 4-plex that I thougt was an excellent deal. Paid ~60k for it near Gravois park. It needs tuckpointing and will most likely need either a new roof or at least some work. I will probably end up putting a minimum of ~30k more into it. SMH.
Hey @DJ Cummins looks like you've been given some great advice already but here's some thoughts:
- It's all about the numbers. Run everything through the BiggerPockets Rental Property Calculator and see how it pencils out.
- Ask the owners "Why are you selling." Don't believe them, but it's a good question to ask :)
- As for having them carry a second, I'd ask "So, is this something you guys would need to be entirely cashed-out on, or are you thinking of holding a small second mortgage if I were to buy it?"
Let us know how things turned out!
@Brandon Turner great way to phrase that question! The realtor had to cancel. We are hoping to see the two properties this week. I will keep everyone posted! Thanks again to all for your advice!
DJ