Checklist for New Landlord of 14 Unit Apartment
Member since 2021 · 16 posts · 1 vote
Checklist for New Landlord of 14 Unit Apartment
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Member since 2020 · 984 posts · 1k+ votes
5yYou are not going to find a canned checklist.
The first thing you need is a bank account with the business name you are going to use e.g. XYZ Apartments. All you need is to file a Fictitious Business Statement and then have your CPA get a Tax Identification Number from the IRS.
For 14 units don't even consider starting an LLC. You don't need an LLC to protect your asset because property insurance will cover any losses and if you are worried then increase your insurance by another $2 million.
You need some sort of accounting system e.g. Quickbooks. I hate Qickbooks with a passion and develop my own software.
Many or all the the units may already have signed leases, but every time we purchase an apartment building we give every tenant a copy of our lease even if they don't sign it so the tenants know our House Rules, how we start the eviction process when their rent is late, who to contact when they have any issues, etc.
When we purchase a property we always write a letter introducing ourselves. In the letter, we tell the tenant who to make checks payable to, where to deliver the payments to, the date the rents are due and date the rent is late.
In the introduction letter we tell tenants we intend to improve the property and we tell tenants that we want them to contact us and report every maintenance issue asap.
As for taking over any property, there are always a hundred improvements that can be done within the first few months. The first thing we do is go through every unit, inspect everything and make the repairs. We always find faucets dripping, toilets running, doors that have lock problems, missing screens, broken screen doors, etc.
The next thing is we remove every garbage disposer and dishwasher and our tenants never complain. Most tenants like the space where the dishwashers are removed and they could care less about the disposers because they stink and there is a lot of food they cannot grind in them, anyway. We save a lot of service calls, a lot of money and that money ends up being in the thousands of dollars over a 10-year period.
The next thing we do when we take over an apartment building is we remove every plant, tree and blade of grass on the property and we put rock in place of the grass. Of course, I am in California, but I save tens of thousands of dollars over a 10-year period because now I don't have to pay for water, pay a gardener, or pay thousands of dollars to remove trees.
The next thing we do is we usually paint the entire outside of the apartment building to make the place look fresh and then you won't have to paint it again for 20+ years.
8 Replies
- Member since 2020 · 984 posts · 1k+ votes5y
You are not going to find a canned checklist.
The first thing you need is a bank account with the business name you are going to use e.g. XYZ Apartments. All you need is to file a Fictitious Business Statement and then have your CPA get a Tax Identification Number from the IRS.
For 14 units don't even consider starting an LLC. You don't need an LLC to protect your asset because property insurance will cover any losses and if you are worried then increase your insurance by another $2 million.
You need some sort of accounting system e.g. Quickbooks. I hate Qickbooks with a passion and develop my own software.
Many or all the the units may already have signed leases, but every time we purchase an apartment building we give every tenant a copy of our lease even if they don't sign it so the tenants know our House Rules, how we start the eviction process when their rent is late, who to contact when they have any issues, etc.
When we purchase a property we always write a letter introducing ourselves. In the letter, we tell the tenant who to make checks payable to, where to deliver the payments to, the date the rents are due and date the rent is late.
In the introduction letter we tell tenants we intend to improve the property and we tell tenants that we want them to contact us and report every maintenance issue asap.
As for taking over any property, there are always a hundred improvements that can be done within the first few months. The first thing we do is go through every unit, inspect everything and make the repairs. We always find faucets dripping, toilets running, doors that have lock problems, missing screens, broken screen doors, etc.
The next thing is we remove every garbage disposer and dishwasher and our tenants never complain. Most tenants like the space where the dishwashers are removed and they could care less about the disposers because they stink and there is a lot of food they cannot grind in them, anyway. We save a lot of service calls, a lot of money and that money ends up being in the thousands of dollars over a 10-year period.
The next thing we do when we take over an apartment building is we remove every plant, tree and blade of grass on the property and we put rock in place of the grass. Of course, I am in California, but I save tens of thousands of dollars over a 10-year period because now I don't have to pay for water, pay a gardener, or pay thousands of dollars to remove trees.
The next thing we do is we usually paint the entire outside of the apartment building to make the place look fresh and then you won't have to paint it again for 20+ years.
- 5yKim Meredith HamptonBusiness MemberReal Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
@Bill Smith are you working with a Broker or property manager? They usually prepare the due diligence lust if items needed from the seller
- Member since 2021 · 16 posts · 1 vote5y
Thank you Kim. I am buying directly from owner. Could you please tell me what's on usual due diligence list?
- 5yKim Meredith HamptonBusiness MemberReal Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
1. Rent Roll showing current rent rate, deposit, lease term, concessions, unit type & arrearage. Included payment history for the last 6 months. Identify any evictions in progress. (Lease audit)
2. Copies of rental applications for all tenants (may not give right away, but always obtain)
3. Tenant Profiles for each unit
3. Utility statements for the past year
4. Service contracts showing term of contract, monthly fees & work to be performed
5. Last 2 years profit and loss statements, or summary of expenses (T12)
7. List of improvements made in last 5 years
8. Current management agreement (if any)
9. All insurance policies and insurance company contact information.
10. Last two years property tax bills
11. As-built surveys
12. Owner's Title insurance binder (is it in a flood zone)
15. Written inventory of all furnishings and other personal property in, on, or commonly in use for the normal operation and maintenance of the subject property. Identify personal property that will NOT convey.
16. All warranties for appliances, equipment, utilities, roof, paving, etc.
17. Depending on the size of the property, does your investor have experience, other assets, liquid resources
18. Rent Comps (MLS)
19. Sales comps (MLS and Co Star)
20. Property Inspection, Termite and 4 Pt/Wind Mitigation (walk every unit if possible)
21. multi over $1 million will need a Phase 1/Environmental report. This report looks at asbestos, lead paint, wetlands etc…(this takes about two weeks)
22. May need to obtain bids for extensive work that needs to be performed
23. Expenses really should be no more that 30-40% of Gross Annual rents, unless there is a lot of room for rent increases
24. May need a survey too, always check with the lender (this can also take two weeks to complete)
- Bakersfield, CA · Member since 2016 · 378 posts · 307 votes5y
Get connected with a local eviction attorney. You probably won't need them soon, but eventually you will. But during escrow, the most important thing are the rent rolls any sort of profit and loss records the seller has. Ask for all expense records they have. And obviously a copy of all existing lease agreements.
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