I'm entertaining the possibility of making an offer on a 12-unit non-listed apartment property. The seller has provided the asking price, as well as, the old listing information from when they purchase the property in 2012. What additional questions and information should I be asking the seller?
Here's what I have so far:
I have some questions about the property:
- What's the current rent roll?
- How long has each current tenant occupied unit?
- Can you provide leases and application information for current tenants?
- How many are HUD/Section 8?
- List of expenses (yearly: sewer, water, electric, taxes, insurance, etc)
- Is property on city sewer & water?
- Property was constructed in 1999
- Has there been any major remodeling/upgrades?
- Interior & exterior photos?
- Major systems (HVAC, Water Heaters, Appliances. etc)
- Are they originals/age of systems (1999)?
- What has been replaced?
@Rick L. congrats on the apt find. The main things you need are:
- current rent roll
- P & L for the last 2 - 3 years
And you should receive that before making an offer. After that, you want to collect as much info as possible before making the offer. Some things to get answers to:
- Why are they selling?
- How long have been been selling?
- What type of debt is on property now?
- What is screening process for new residents?
- What is the effective occupancy?
- What type of work as been done on property? What work is needed on property?
- When did they buy the property and what did they pay for it?
There are many other questions but those are some. The main thing you need to know is how much is it worth today based on the #s and cap rate.
@Rick L. Congrats on the find Rick! Would you mind elaborating on how you came across this? I am aggressively searching out deals right now and would love to know what is working for you.
Bump for the weekday crowd!
@Michael Mott , a friend of mind that I'm doing a favor for passed along the information.
@Joe Fairless , thanks for your response. One question, I have is what do you mean by asking them what type of debt is currently on the property and why?
Also, asking them what they paid for the property...is that a common question? I'm not experienced in this stuff, but I feel uncomfortable asking this...I feel it's too personal of a question. Am I wrong.
Again, thanks for your help!
@Rick L. debt is referring to the financing they have on the property. You'll need to know if you can put new financing on it, have to assume their loan, if there's a pre-payment penalty on it, etc.
Re: what they paid, it should be public record so if you're not comfortable asking then you can look it up on the county website (although it might not be accurate due to various reasons). I ask that question and have never had anyone have an issue with it.
Great info Joe. Might I ask what the P & L is? I got a feeling it's something I should know.
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