All Forum Posts by: Mike Hsiao

I've been looking at a quadplex in San Diego area for sale that I'll call Property A.  Property A is built in 1940, 2400 sqft building on a 6700 sqft lot, 4 car garage There are no interior pictures, but if the inside follows the outside of the properties, I'm guessing it hasn't been maintained or remodeled recently.   

I went on Redfin to find multi-family properties in the same zip code that sold in the last 3 months. The closest i found  was a 7 unit (Property B), built in 1985, 5693 sqft building on 7,000 sqft lot, 7 car garage just 2 blocks up from property A.  It sold for $574/sqft.  

I asked my agent what he thought we should offer on Property A, so he tried to pull up only quadplexes that sold in the last 6 months. He found one that sold back in June 2022,  was a couple miles away in a nicer neighborhood.  I told him that wasn't a good comp because the neighborhood is quite a bit nicer.

He said my comp wasn't accurate because it was a 7-unit.  Yet he also sent me a triplex as another comp, but still a couple miles away from Property A.  This is in an area where neighborhoods can change pretty quickly street to street.

I know valuing a multi-family property is different than single family, since you need to account for the income and expenses, but my thought process was to take the $574/sqft sell price of property B, and discount it lower to ~$550/sqft given that Property A is much older building and likely would need a lot of rehab. And the street is a tad bit less desirable than property B.

To me, property B was more accurate based on the location.

Thoughts on how to best go about valuing Property A?

@ Dan, Twana, great insights on the sewer scope, as well as the beach sand being used underneath foundations in certain older areas of San Diego.  This is very helpful to know!  The neighborhood I live in has homes built on an old landfill.  Certain homes along the canyon rim have had foundation issues because of this. I  found this out talking with the neighbors one day.

I've been looking around San Diego for small multi-family properties.  I've come across a few interesting ones, but they are built in the 1950's, 40's and 30's.

I know some of the things that I need to consider in these older properties when deciding what price to offer is potentially upgrading the plumbing, electrical, insulation, etc.

So I wanted to get some feedback on how to get a sense on how to estimate the costs to repair plumbing and electrical?

I was thinking during the inspection phase, I would hire a professional plumbing and electrical inspector, in addition to the normal home inspection.  Can they get a pretty good feel of what needs to be repaired/upgraded just by looking at exterior features?  I know it's impossible to truly know what's going on without opening up all the floors and walls, but just curious how others here go about this with older properties?

And what other things I should consider if I move forward with an older property?

Hello All,

I'm currently looking for a multi-family property in the Columbus OH area. One thing that concerns me is the step up in property taxes being above 2%. This really hurts CoC returns, and wanted to see if there are any other options other than the below that I've found.

1. Finding a property with a long Tax abatement would be preferred. That solves the issue for a certain time.

2. "Drop and Swap". This is new to me, but sounds like a way to convey the property from one LLC to another, in order to keep the original property tax rate. Although there is NO guarantee this would be approved.

So just wanted to see if there are any other ideas, if any, to avoid the step up in property tax.  Or if anyone has any experience on the "Drop and Swap".