I am meeting with a seller this weekend to discuss the purchase of a triplex. Since this is my first multi-family property, I really don't know what questions I should be asking or what information to look for aside from the basics (construction issues, vacancy, etc). I'm hoping to get some insight from the BP experts. Thanks in advance!
Here are a few things I would do.
Find out who is paying the utilities; gas, water, electric, etc. If the landlord is paying some of the utilities check into the possibility of passing that cost on to the tenant.
Find out who is maintaining the yards.
Walk through every unit, not just one.
Ask the seller a ton of questions, but far more important....ask the occupants. From the seller, definitely get history, insurance, tax info, any planned special assessments, major repairs, any warranties (foundation, waterproofing, roofing, etc), a copy of all leases to review as part of a formal accepted offer, etc. Be sure he doesn't have a constant late payer that he's wanting to push off on you.
And yes, who does the lawn/snow? If it's a buddy buddy thing with one of the tenants, those are rarely good and often mean rent is underpriced.
Ask the tenants:
What issues have they had? - Sewer snaked 5x per year? How is their heating bill? Poor insulation? Any pests/bugs they've had or recent treatments? Any noisy neighbors they hate out of the 3? Lots of things like this. They will be far more open and honest with you.
Thanks for the responses! How should I go about getting to speak with the tenants? Should I go through the current owner? Seems like just knocking on the door would be frowned upon.
@Billy Daniel Don’t just go knocking on doors. You don’t want to spook tenants. Tenants tend to think “automatic massive rent increase” when they hear a property is for sale. The current owner certainly doesn’t want tenants bolting and it might not be to your advantage either.
At the outset, you want to know the “big things”. Rents, vacancy, utilities, when the last time major cap-ex items were touched, etc. If the “big things” make sense you can ask to walk through the units. You’ll see in about 5 minutes how the tenants are treating the units.
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