I have a property that’s been brought to me. It’s in Columbus, Ohio.
27 units and 4 garages. Built in 2003 and all Two Bedroom Units.
What questions do I need to ask prior to this investment?
Asking Price - $2,575,000
Any help at all is appreciated!
You want T-12, T-3 and T-1, leases, any lost of and any records of improvments including warranty information, surveys, environmental reports and any other pertinent information they may have on file. Once you receive this you can determine what you are willing to pay so you can prepare an LOI
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
@Anirudh Mohan welcome to BP! You need a lot of answers most of which you need to get for yourself. A couple of big ones might be. Will you give me complete access to all leases and financials if I make an acceptable offer. Will you give me access to schedule an inspection of the property. If the answer is yes then get to work and create a financial picture of present situation and future conditions under your management. Determine whether or not it is worthwhile to rehab and get a lot more rent. How long are the leases and remainders etc.
In my case I would seek help from my accountant and set my buyer's agent to work ferreting out lots of details.
I have a property that’s been brought to me. It’s in Columbus, Ohio.
27 units and 4 garages. Built in 2003 and all Two Bedroom Units.
What questions do I need to ask prior to this investment?
Asking Price - $2,575,000
Any help at all is appreciated!
You want T-12, T-3 and T-1, leases, any lost of and any records of improvments including warranty information, surveys, environmental reports and any other pertinent information they may have on file. Once you receive this you can determine what you are willing to pay so you can prepare an LOI
Everything Greg said is definitely correct and probably highest priority diligence items, though I would move leases to the bottom of the list and rely on the Property's rent roll until you're further into the process. Off the top of my head, I would add on to his suggestions:
Has/Can the broker provided rent and sale comparables? You're going to want to do your own research to see how the asset sits within the submarket, but the provided(?) comparables are a good place to start. If even the broker comps aren't adequately penciling, then you can kill the deal and move on without spending too much time.
What sort of financing are you contemplating? It's going to be easily 65%-80% of your cap stack, so you should have a rough idea of what is obtainable in the post covid market.
How are RE Taxes treated in this submarket? Because this is a multifamily asset and not a true commercial property, any big swings in RE Tax assessment are going to really affect your NOI. Maybe there's nothing to worry about here if assets are re-assessed regularly, but there a huge # of transactions where this is not the case and it kills or should kill the deal.