How to analyze a Multi unit

Question

I am in the process of trying to find a multi unit and I am running into an issue where they are getting under contract before I can even get my questions answered from the realtor.

What are some ways to overcome this challenge?

How should I analyze these deals?

Thank you,

Sohil Shah · Answer

Thank you,

Trent Stone · Answer

Read the "ABC's of Real Estate Investing" by Ken McElroy. Hands down the best book for getting into multi family.

The key is to be able to move quickly. If you know your market and you know your numbers, you can sift through deals faster to see if it's even worth doing anymore due diligence without even talking to the listing broker or your agent. If you like the deal then submit the offer. You will have to have your financing in order and have your EM ready to be taken seriously. You will also have a Seller's Disclosure period and your Due Diligence period to check the numbers, get inspections, and re-negotiate if you have to and still be able to back out if something comes up. But make sure you are only submitting offers if you genuinely intent to follow through with the purchase. Never trust the pro-forma numbers the listing agent provides, always get your own numbers first then if you decide you want to make an offer you will need to verify all the numbers and leases. I submitted an offer on a multifamily then when I asked for the rent roll, leases, and accounting the owner had nothing. He threw together an Excel spreadsheet in 5 minutes with a bunch of BS. He couldn't verify a single number and through my due diligence period I learned all his numbers were whack. I cancelled the contract, got my EM deposit back with no problems.

I also highly recommend tracking all these properties you were interested in that other people bought. Run your numbers first, then go back and see what they actually sold for. It will give you a better idea of what your market is doing and what CAP rates you should be expecting.

Good luck!!