Investor · Worcester, MA · Member since 2020 · 1k+ posts · 1k+ votes
A couple GPs and I just got a 50+ unit portfolio under contract. We aren't new investors (we own about 60 units combined), but this is by far our largest acquisiton. What are some of the top due diligence items you would do on a portfolio this size? We appreciate the insight.
@Bob S. - Yes, we have 60 units across all of us but all of them are 2-6 unit properties, smaller stuff. I suppose it's the same due diligence but its almost double our portfolio in one deal. Just a ton of stuff to tackle and aiming to get insight from other people who have done due diligence on a larger deal like this.
That's the issue when you buy a portfolio. There are no real shortcuts. You'll have to pay for 50+ inspections, which means multiple inspectors and then read 50+ reports and negotiate them. The only way to streamline is to inspect 10 units full and the rest high level (the big ticket items: foundation, roof, windows etc) and then extrapolate to the full portfolio. But when you look at the potential risks, you are quickly back to 100% inspection.
Inspection reports? Hmm I have done 100s and 100s and 100s never getting an inspection. Heck I have purchased many without ever getting inside. IMO if you need an inspector to tell you what's needed, well you should not be in the business. We walk props in 20 min , gather our numbers, make and offer can close.
All the best
That's good for you Bob. But obviously Andrew has not done 100s and 100s of deals. And even you got started at some point and did not have the necessary experience. Did anyone tell you, you didn't belong in the biz? We all started as noobs, we had a lot of help along the way and now we are paying it forward.
Frankly I still learn new stuff every time I attend an inspection, and heck, I have two engineering degrees and attended and negotiated more home inspections than I can count over the last 10 years; so personally I am satisfied with my own inspection, but for anyone who does not have the experience (yet), it's better to hire a pro.
@Bob S. - Yes, we have 60 units across all of us but all of them are 2-6 unit properties, smaller stuff. I suppose it's the same due diligence but its almost double our portfolio in one deal. Just a ton of stuff to tackle and aiming to get insight from other people who have done due diligence on a larger deal like this.
That's the issue when you buy a portfolio. There are no real shortcuts. You'll have to pay for 50+ inspections, which means multiple inspectors and then read 50+ reports and negotiate them. The only way to streamline is to inspect 10 units full and the rest high level (the big ticket items: foundation, roof, windows etc) and then extrapolate to the full portfolio. But when you look at the potential risks, you are quickly back to 100% inspection.
Inspection reports? Hmm I have done 100s and 100s and 100s never getting an inspection. Heck I have purchased many without ever getting inside. IMO if you need an inspector to tell you what's needed, well you should not be in the business. We walk props in 20 min , gather our numbers, make and offer can close.
All the best
we are all very impressed.
The point I am making, is IF you have a team, you do not need waste time and money on inspections.
Hey Andrew, saw your Real Estate Rookie podcast. Awesome, man. Glad to hear you’re doing great and congrats on the deal. If there are any in the Framingham/Natick area you want me to inspect/give info about feel free to reach out.