Question multi-family

11 Replies

Hello guys,

I'm visiting a few multi-family lately and at the end of a visit i always a feeling that i miss a subject i miss a question to ask to the Agent.

What are the Overall question you guys ask to the agent?

Thank you!

Well, not knowing what you do ask, it's hard to answer what you might be missing...When you get a property under contract you can delve deep into the particulars of the building and its finances.  I might ask what the historical vacancy rate is for the building, what the general demographic of the tenant base is, what capital improvements have been made in the last few years, etc. Are rents at or below market? A good agent who specializes in multi family will know the cap rates at which other units are selling for in the area and what the rent trends are. 

What are some of the questions you do ask? 

Originally posted by @Eva Salas :

Well, not knowing what you do ask, it's hard to answer what you might be missing...When you get a property under contract you can delve deep into the particulars of the building and its finances.  I might ask what the historical vacancy rate is for the building, what the general demographic of the tenant base is, what capital improvements have been made in the last few years, etc. Are rents at or below market? A good agent who specializes in multi family will know the cap rates at which other units are selling for in the area and what the rent trends are. 

What are some of the questions you do ask? 

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I agree that these are important questions but don't you want this information BEFORE you go to contract?  Your offer is actually based on the answers to these questions.

Depending on the size of the building, a realtor may or may not send out a comprehensive sales package with rents, expenses, and cap x included.  But if a buyer wasn't interested enough in my building to go into contract, I wouldn't be inclined to show him/her my rent rolls, etc.

When I say delve deep, part of that means finding out exactly who the tenants are along with individual rent payment history, any evictions,  receipts for cap x, etc. 

Going into contract gives you access to all these things and of course you have contingencies in place if you don't like what you see. 

@Barbara G. Yes those were questions I would ask the agent before going into contract. Sorry for the confusion. 

@Eva Salas is right, we need to know what you ask to know what not to ask.

Question: what kind of multifamily? What is it near? Who do you expect to rent to?

Originally posted by @Barbara G. :

I agree that these are important questions but don't you want this information BEFORE you go to contract?  Your offer is actually based on the answers to these questions.

As a buyer and seller of apartment buildings, there are some quirks that allow for discoveries after you are in contract. 

It is always best to lay everything out on the table.  Especially if it is likely to be found during the due diligence phase.  The buyer will likely renegotiate the price if significant discoveries are made.

As a seller, I try to lay everything out in advance.  I will communicate through my agent that what they see is what they get.  If they uncover something that I did not know about, I may renegotiate if it is prudent.

As a buyer, I expect the seller and agent to tell me everything upfront.  They rarely do.  So, renegotiation of price happens frequently.  It is typically over major repairs or bad information on income and expenses.

You can ask a lot of questions of the agents but you should not expect to always get a straight answer.  The agents usually have a story to tell you of why you will do better than the last owner.  I want to do better than the last owner but that is something that I usually need to figure out.

Ask about the tenants. Ask about upgrades or major repairs.  Ask about the history of the area if you do not know that.

I really care about how rentable the property is and how desirable it would be for a tenant.  I would like to know why the seller is selling but asking the agent will not likely get you that answer. I want to know the condition of the property and how much money is going to need to be invested into it but will not likely get an accurate answer from the agent on this either. 

All this will need to be uncovered in due diligence to the best of your ability.

You should read Ken McElroy's book The ABCs of Real Estate Investing. The book focuses on multi family properties.

I agree with the others are saying. The BP members could help you out more if they knew what you asked.

Also, different properties and locations bring up different questions.

Thank you for responding so quickly to my post. (im french sorry if my terms are wrong)

Most of the time when i first call an agent i always ask for the rent rolls Tenants behavior (pay rent on time) for the last 2 years any big major repairs, capex, property management, inspection and regulation, i may be wrong one of my big worries is the foundation i'm obsess with that if there is any repairs i normally run away (maybe i'm wrong). Any leaks from the roof etc.. 

I don't know if I'm missing any good question that need answers. Or I'm just searching that thing that will make me back off from a property because I'm just scared of making the jump haha thats probably it!

anyways thank you please let me know if im missing some good points i need to address on a property either to the building or tenants.

thank you.

Ho and i just received the ABC of Real Estate investing I'm reading it right now 

thank you

Hello

On multi-units its always good to ask about the parking and how the trash is handled. Some time you find there is not enough parking stalls which leads to big problems.

Tommy