Multi-Family Units - Target!!!!!

[Mark Pettie]

Ok so my focus is multi-family units!  Focused and ready to start making some offers (if they cash flow of course).  So other then the money can you give me some more pros & cons to think about re: MFUs.   

Thank you!!!

[Lori Lusk]

Hi @Mark Pettie, 

There are several things to take into account when looking at MF. You’ll want to consider the age of the building and whether the major systems have been updated. I.e. electrical, plumbing, sewer. As well as the potential for asbestos and lead based paint. These can add a lot of cost down the line. Also consider capex like a new roof, parking lot paving, new siding, etc... likely your lender will require a PCA (Property Condition Assessment), similar to a building inspection and they should be able to fairly accurately identify condition and useful life, however I would take their repair estimate $’s with a grain of salt. 

Also make sure you speak with several property managers and get their opinion on rental rates. Never trust what a broker is putting in their OM. Lots of brokers are shady, or just plain don’t know what they’re doing unfortunately. It’s always a good idea to have a contractor and PM walk the property with you to tell you potential rehab costs and rental rates with certain finishes and layout. A PM should also be able to give you a good idea of vacancy rate and whether you can add in RUBS for more income. 

Lots to think about with MF. But we’ve had a lot of fun, headache, failure and success. But all in all it’s a great asset. Hope this helps. 

-Lori