Step by Step Process in Purchasing Multifamily Units

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So I'm looking to acquire my first multiunit. I know the process is somewhat similar to purchasing a single family but I would like a guide.  Does anyone have any ideas where I can find a great straight-forward process tool?

Originally posted by @Ira Sullivan :

So I'm looking to acquire my first multiunit. I know the process is somewhat similar to purchasing a single family but I would like a guide.  Does anyone have any ideas where I can find a great straight-forward process tool?

The process is similar for small properties but very different for larger assets. Basically you find the deal, analyze, submit LOI, draft the contract, line up financing and equity, perform due diligence then close.

It would be helpful to know what size you are talking about.... if 4 or under its the same as a SFH, if 5 or more, I strongly suggest finding a good commercial broker to help you as it is a whole other world.

In Portland, for SFRs. the contract is usually unless you kill the deal, it'll close.  Main things are inspection and getting funds.  Make sure you have a "must meet or beat appraisal" contingency in ANY contract.

For multi-units, the deals are you need to keep pushing forward on contingencies to keep it alive.  For my PSAs (EACH DEAL IS DIFFERENT), the usual/customary contingencies:

1) Title review - Usually 10 days after you get a PTR. You're looking for exceptions that survive close or get removed by close.

2) Physical inspection - Usually 30 days after M/A (mutual acceptance). Unless it's a huge deal, do 100% physical with interiors. On interiors, goal is to draft a turnover budget. On remainder, I'm looking for CapEx stuff like roofs, siding, windows, paving and ANYTHING that involves moisture invasion.

3) Books/records (30 days after M/A) - Look at the ACTUAL (do NOT accept ProForma from a broker as final) to see if the NOI is as promised and the rent roll is accurate and you have all the tenant docs like leases at a min. Your lender will prob want a summary to figure Debt Coverage Ratio.

4) Financing (90 days after M/A or 60 after waiving 2) and 3)) - This is the time the bank takes and for you to have a rate/terms acceptable to you (make sure your broker puts this in the PSA since it'll affect refundability of E/M(.

@Steve Morris .

Thanks Steve. This deal will have to be a cash or hard money deal. The question is, since it's in a Class D neighborhood, is it worth my time. It is cash flowing except it needs some work before all 17 units are fully functioning and ready to lease. Currently 12 of the 17 are rented.

I would contact a commercial broker to help you.  

If you will be looking for agency debt then timing can be much more extended. 

Afaik  lenders will want a certain level of occupancy etc  

They are very similar but know that you usually can't tour the property before you make your offer. You will need to be under contract before you can tour. Your agent will write your offer contingent on your approval. Also, you will want to do your due diligence on the P&L and tenants/leases.