What to look for on rental property visit?

Question

Hello everyone!

I am currently viewing multi family rental properties with my realtor to hopefully purchase one in the near future.

I was wondering what other investors look for when they first see a property, aside from any repairs/renovation issues.

I wanted to make notes at each property I walk, things such as parking, laundry, what needs updating, what the rent is, type of tenants that live there etc.

Thanks for any input

Joseph Firmin · Answer

Take video and talk through it - letting yourself know what you want to update. Make comments about the big ticket items you see, the deal breakers and retrade items. Taking notes is hard as you're walking through unless you have plenty of time to slowly walk and pause and write through all the units of a MF property. You can ask someone to go with you and take the video so you can make notes as well. In terms of other things outside of the renovation items - the neighborhood, tenant base, red flags for property management issues and evidence of criminal activity. How utilities are metered and also garbage.

Michael Reilman · Answer

Hi Nick,

To add to this discussion, anything that is high dollar, such as utilities so plumbing, electrical panels, HVAC, anything structural, windows can get really expensive. There can be a lot of detail, so for example, knowing how many washer / dryer units there are, age of water tanks and furnaces, etc.

But also take a look at what you can do to improve the property? Covered parking (big here in Cleveland), what would it take to reposition the property? What are the neighboring buildings doing that this isn't?

When I walk through a property, I take pictures and notes. While very basic and scribbly, it helps revisit and evaluate later to assign numbers to issues.

Michael Dang · Answer

I look at the neighbors and surrounding properties near the subject property. Are they in good condition, clean, and well kept? What parks, amenities, and schools are close by? Schools are a #1 factor in many decisions. Plus that means those tenants will tend to stay longer and keep the units well.

Dan H. · Answer

Of all the responses this is the one I most agree with. We typically buy value adds. After the value add our units are nice. We can fix our units (we can repair/replace most anything), but if they are surrounded by junk units or on busy thoroughfares, we cannot address those issues. We are OK with our units being nicer than the neighbor units but we are not OK if the neighbor units are terrible (class D/F) units.

Almost at the same level, we look for landlord headaches that are too difficult to remove. A big one it a significant shortage of parking. Can we allocate parking for each unit? Related to LL headaches, detached units are preferred to attached units. Separate yards are preferred to shared yards. Separate utility meters are preferred to shared meters. Etc.

Both of the above items could make it difficult to get the top quality tenants to desire to live in our nice units.

We have walked from good value purchases due to both location and LL headaches. We want to be proud of our units and if they are in a poor area we are not going to be. We also want to have our units be as passive as possible (make no mistake, buy n hold is not going to be 100% passive) which is not likely if the units have LL headache items.

Good luck

Calvin Ozanick · Answer

First of all, I almost always recommend and rely on an inspection for the condition of facilities. However, one thing I like to do is consider rent raises. If I am walking a unit that is rented for 750, and I want to raise it to 825, I ask myself, "What is stopping this unit from being worth 825?". This usually allows me to think what I would expect/want if I were renting the unit.

Nicholas Mann · Answer

@Michael Reilman @Greg Dickerson

Thank you guys both so much for your input.

I just walked through 3 properties today. All of them were 2 family type houses with potential to add another unit! The first 2 seemed pretty awkward layout wise but made sense from a numbers standpoint. The last house was the best house for tenant purposes and overall a good side by side 2 family house but seemed more difficult from a numbers (cashflow/ROI) perspective. Either way it’s the first of many walkthroughs I’m sure.

Thanks a lot guys and best if luck

Nick Mann

Greg Dickerson · Answer

Check HVAC, electric meters, water sewer areas for leaks, large trees near buildings and sidwailks for root issues, windows and doors age and condition, structure issues and integrity etc.

Also if you can get into the units make sure to view all of them and behind every other door that’s not a rental unit.

What to look for on rental property visit?

What to look for on rental property visit?

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