MULTI-FAMILY RENTAL PROPERTY WALK THROUGH

4 Replies

Hey Guys, currently I'm looking at multi family properties with my agent and we are in the process of doing walk throughs and showings! What should I be looking for when doing a walk through of these properties. I've already done my numbers to make sure these properties are already contenders to purchase, but this is my first multi family purchase, so what should I be looking for or looking at when it comes to these properties?

Thanks in advance, 

Ray

Hi Ray, congrats on taking your first step! My wife and I are one week away from closing on our first duplex. Our biggest learning during our search was to confirm that zoning approves the use of the property. Two months ago we were one week away from closing on a three family property, but the deal fell through. Our agent and seller showed us the tax and field card that indicated it was a three family home. However, the zoning department confirmed the 3rd unit was illegal and zoning only allowed it to function as a two family. It was a HUGE let down because we've already invested in appraisal, inspection, municipal & title search, legal fees etc. We ended up losing about $3k, but at least we didn't buy a long term headache. Zoning dept. is backed up because of COVID and it took us about 5 - 7 weeks to get the Certificate of Zoning Compliance, which is why we pulled out of the deal so late (thankfully we added a COZC contingency). Make sure you always ask for permits that support what the property is being advertised as - don't take your agents word as I did. Do your own due diligence and always ask for evidence that supports the zoning ( a certificate of occupancy or a certificate of zoning compliance). Good luck!

Ray,

Christian is right, there is a laundry list of things that you and your agent should consider in your due diligence process. The walkthrough itself is kind of the start of this process. If you've already run your numbers, use the walkthrough as a chance to verify your assumptions. Make sure details like bedroom/bathroom count match the listing and look for any opportunities to add value that might not be evident in the listing. I am currently adding two bedrooms into the attic of one of my properties that will add value to the property and monthly cashflow in added rent. While you should definitely get an inspection down the road, look for any major issues. It'll save you time if you can spot major issues ahead of time before submitting the offer and paying an inspector.

I'll chime in here and add another vote for verifying all zoning and usage like Christian has already stated. I currently am owner occupying a duplex in West Haven I intend to ask for a variance in a few year's time to rezone the property as a three family, but man is it going to be a headache to even try. Would have been really nice if the property was already a legal three. But it also probably wouldn't have been as cheap to pick up!