Fellow investors, I have an opportunity to buy a fully occupied duplex. It looks like a great deal but through my excitement I am having problems thinking clearly. I would really appreciate some ideas as to what I should be thinking about as this deal evolves. Thanks in advance.
@Colin Davis , I'm a little confused as to what you're asking exactly. You have an opportunity, and you state it's a great deal, but then you leave the reader in the dark. Could you please go a little further as to the numbers you're looking at? Also, can you give some of your some more information as to what you want to do with the property if you were able to obtain it? What is your end state with the property, and what strategies are you looking at doing? Thanks, and feel free to PM me if you don't feel like sharing with the rest of the page. Good luck!
@Colin Davis focus on the numbers and underwriting. Try to take all emotions out of it. If the numbers make sense and you have already qualified the market then the deal will speak for itself.
Apologies Matt. You are absolutely right. I should have explained that I have yet to evaluate the deal because there are too many unknowns. I asked an agent to see the property and he was the one that informed me that the property is fully occupied. I got really excited because there are no offers on the property as of yet, and multifamily is really hard to find in my area, especially for the price $150,000. In my excitement I could only think to ask, "when can I see the place?" But I know that I need to be so much more inquisitive like, "how long are the leases?", "what does each unit rent for?", "why is the owner selling the property?" I guess what I am asking you as an expert is, what other questions should I be asking?, and what else (in general terms) should I be thinking about? Or should I be asking any of these questions at all until I've seen the place?
@Scott Morongell I find it funny when I tell myself that I will never get all emotional over a deal and here I find myself all emotional over a POSSIBLE deal. You wrote exactly what I needed to read. Thanks
@Colin Davis my pleasure!
@Colin Davis Provide some details:
- Asking price
- Square footage, beds, baths/unit
- Neighborhood class, rental class
- Lease terms
- Condition of property, upcoming repairs
Another thing to ask, is what (if any) improvements have been done to the home? How old is the roof/HVAC? Are all the taxes up to date? You can likely determine the market rate by checking zillow/hotpads/etc and see what it should be renting for.
Also, if you can find out the current tenant's names, check their history to see if maybe the real reason they're selling is because of bad tenants. Very few people sell because it's easy money-- they sell because they are done with the stress.
Things to do if you are in contract.
1. Look at the condition of the property. Check Roof, HVAC system, Plumbing, Electrical. Get a termite inspection.
2. I would also have the sewer lateral checked. One item that most people miss. You want to make sure you don't have a $5-8k bill lurking.
Things to do before you are in contract
1. Review the lease and see if the rents are under market. You can cross reference this on craigslist and check what similar apartments are renting for in the area.
2. Check similar comparable units in the area. See if there are comps that are in similar condition and see if there are some that are nicer. This will give you an idea on the upside.