All Forum Posts by: Percy N.

I would break the "DD walk-through" into 2 parts:

1. Physical condition - Roofs, interiors, plumbing, electric, HVAC, concrete, landscaping, etc. Walk every unit and take pictures of items that need attention. If logged using some software or even a spreadsheet this information can be very valuable to plan the renovations needed for each unit. Make a note of units with pets. Look for any government-issued violations. Are the common areas and amenities in good shape (pool, laundry, etc)? 

2. Admin review - lease audit (do the actual lease documents match the rent roll). Also, make sure you understand the delinquency at the property. 

The information collected at this stage will feed into your takeover plan and renovation plan.

In large markets, the challenge is getting the attention of a property manager for smaller properties (less than 100 - 200 units). It is also difficult to justify full-time leasing and maintenance people on the payroll.

@Andrew Plummer, the Nashville market is pretty hot.

Have you tried networking with some Commercial brokers and at your local REIA?

If you find a 200+ unit deal, let us know. We have about 1000 units in the Nashville to Huntsville area.

@Albertinny Colin, what is the scope of the rehab?

These days you also need to factor in delays to the renovation schedule due to supply chain and labor shortage. These can be significant (3-4 months backlog on items that keep changing) which in turn impact your occupancy, rent projections, NOI, etc.

Just my $0.02 after having rehabbed about 500 units during a pandemic. Twice as hard as otherwise.

 Depends on the property management company and ownership.

Larger property managers will have a "standardized" CoA (we do that for 1000+ units across 5 properties we own and operate), HOWEVER, the person entering the data (typically the onsite PM) still needs to make sure they use the correct accounts for entry....and then the Regional Managers should check the PM's work regularly. If the process if not followed in this chain, then the data will not be good and it take a lot of time and effort to fix it (trust me).

For a 70 unit property, this should be easy to audit and maintain good accuracy.

Send me a private message if you want a quick 2nd opinion on your CoA.

Interest rates, occupancy, exit cap rates, etc are some of the common parameters you can stress test.

@Mathew Kuhn, what size property are you asking about?

For a larger multifamily (100+ units), the work just begins once you close.

Having good staff (manager, leasing and maintenance) is vital. There will always be issues with some residents and those will take up a majority of your time and effort.

Then there will be the occasional pipe bursts, small fires, etc.

Dealing with tax appeals, tax returns, insurance shopping.

If you have investors, keep them updated and informed throughout. Depending on how many investors, they will have differing opinions as well.

And then of course any refi or sale can be as involved as an acquisition.

So in short, there will be plenty of things to keep you busy after you find the deal and close.

@Christopher Lombardi as Shafi mentioned, it will depend on a number of factors.

The risk will also depend on the nature of the project, the experience of the team, etc.

Are you also expected to maintain a certain amount of liquidity through the term of the loan? This may come with a lost opportunity cost.

@Steve Camp, we have used Resman and Realpage.

From your description, it sounds like more of a process issue.

Regardless of which PM/accounting software you use, it is just a tool that depends on the underlying business process.

Either software should be able to use a standard or customized CoA (Chart of Accounts).

How many units are you trying to manage? I will say Resman is easier to implement and use unless you have tens of thousands of units.

As for the WO entry, that is also a business process issue and the PM or maintenance lead should make sure all WO entries are entered by the end of the day or at least 48 hrs.

Don't let laziness or lack of resources be blamed on the software.

Luckily I have not personally seen it for any of the syndications I am part of.