Hi RE Gurus,
I am meeting the owner and the Agent of a Multifamily home this coming Sunday. It would be really helpful if the experienced folks here could suggest me some important questions to ask and the kind of paperwork I need to ask for.
Thanks in Advance,
Oh man this is awesome ... If you don't mind I'm going to post at least 50 questions for you. Let me know if that is cool? I'm going to invite my directors as well.
A couple questions first:
1. Are you looking to continue buying more properties or are you looking to just buy one for now. I ask as it might determine the type of seller you might want to go with.
2. Are you going to rent it out or do you want your seller to do that?
3. Are you going to manage it or do you want your seller or someone else to manage it?
Enthusiastic, sharp as a tack, build rapport....
Gurus are all expensive fluff with no substance. I'll send along some fluff vibes lol.
Are they allowing you to view occupied units already at this early tire kicker stage? I don't allow that until we have something sketched out in writing or are really close to it.
The agent will have some info for you. Probably financials and possibly a seller disclosure statement. The MLS listing sheet will have a lot of info I always ask so many questions as we walk through it would be hard to just jot a few down. The usual rapport building stuff early on. Maybe the way they manage, how long they've owned it, pet policies, who pays what utilities, etc.
Hopefully they are asking a decent GRM. It must have stuck out to you in some way as being a possible good value @Sastry Konduri ? What drew you in to view this particular property from the MLS? How many units?
Hey, Mr. Konduri
I believe multi-family building are the best way to go as far as real estate investing. Over all they are perfect for me and my goals as far as cash flow and increasing value. some typical questing I want answered are;
- 1. What are the current rents per unit? (Ask your self if the units are over/under priced for the market.)
- 2. What are the vacancy rates? (A really high vacancy rate could indicate a problem, you could probably fix to increase the over all value of the building . A low vacancy rate can mean good cash flow.)
- 3. Are the units separately metered? (If they are GOOD! you can pass along the cost of utilities to the tenants. If not, I would see if it would be possible to get that done, other wise it will cause headaches with billing tenants.)
- 4. Could you possibly live in one of the units? (The best way to get bang for your buck is to house hack a property. judging by the fact this is your first investment property, this is a great way to get financing with an FHA loan with 3.5% down, and to cut out most if not all of your living expenses.)
- 5. Ask tenants if they experience any problems with how the property is managed. (Fix whatever problems they have. If you can make your tenants feel more valued, they happier they will be, the longer they will stay, and the more rent you can collect.)
I hope things work out well for you on Sunday. If things do work out be sure to post a success story because I know I would love to hear it. Good luck!
Thank you all for the reviews.
@Jim Fleck Yes, we want to continue investing if things workout. I and my partner are planning to hire a management company to manage it for us since we are newbies also want to be passive investors at this moment. But I am not sure if letting the seller manage it is a good idea.
@Steve Vaughan The agent said that he is going to give me a tour of the unit. Not sure if he will let me see the occupied units. Yes it did stuck to me as a possible good value. I did my math and felt this is a good cash flow property. Having said this, we need to know some more info about the property. The agent mentioned that the seller lives just 2 houses away from the property. So, I will also have to see why he wants to see the property which he can very easily manage. Also, this is well within my budget.
Thanks for the reply @Baylus D. Nicholson
I asked about the seller managing it, only because if he owns many, he may manage all of them, he may also use a management company that you'd be able to use as well.
Other questions from above that we ask as well are:
- How long they've owned it
- Why are they selling
- Pet policies
- Who pays what utilities
- Current rents per unit?
- When was the last time they were raised?
- How are they in relation to the area?
- What's his vacancy rate?
- How long have the current tenants been there?
- Have they indicated they want to stay?
- Are the mechanicals separately metered?
- When was the roof replaced?
- What major improvements have been made in the last 3 years?
- How old are mechanicals?
Gotta go, but will post more if I can find my checklist.
Ok Folks Thanks for all the replies. I did look at a bunch of properties and decided against that area. Stockton CA was the area and I did not feel comfortable with the area as well as the kind of tenants.
You need to very careful where you purchase a property in Stockton. I own rentals in Stockton and have helped many Bay Area investors find rentals here. Let me know if you have any other properties in mind and I can give you my feedback.
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