Things to think about when walking a 47 unit property

[Austin James]

What are some good things to be looking for and thinking about for a prospective buyer who is walking the grounds of a 47 unit building?

I have a pretty good idea, just hoped to snag a tip from a more experienced operator that may save me a headache.

[Henry Clark]

OP.  To save time on people inputting.  Please put your Walk-Through list down, and then ask folks to make suggestions.  

Also see if you can get your hands on an appraisal for a similar type of property.  This will address a lot of the marketing questions.

You will get a greater response.

[Gino Barbaro]

@Austin James

Understand the area, the current tenant base,the median income, is it in a flood zone, the age of the asset, the condition of the plumbing, the electrical wiring, the fuseboxes, the age of the roofs, the age of the mechanicals, the condition of the foundation, the drainage of the property, does the property have a C of O, is there ny environmental concerns such as oil tanks being buried, the current property management company, what are the amenities.

These are just a few things to look out for. If you have a pretty good idea, then you should consider hiring someone to help you create proper due diligence. Even missing one component can cost you tens of thousands of dollars. Ask me how I know. I had a pretty good idea when I bought my second deal, not good enough, and I paid for it.

Gino

[Scott Mac]

Your very first picture of every unit should be a picture of the unit number.

Have the manager or maintenance or whoever is assigned to open the doors for you to call out loudly management company before proceeding in. Once inside be wary for large and small dogs that may come out of another room quietly and try to bite you.

Be wary of dogs of all kinds even if they seem friendly do not pet them.

Management should have put notices on the apartment Doors advising all residents to crate their dogs or remove them from the apartment during the time that you will be there. If dogs are loose inside the unit and you are uncomfortable going in management will have to take that up with the renter And you will probably need to come back the next day to vet that unit.

Be wary of renters who are home and say fido is a nice dog she never bites.

Be wary of renters who seem to be overly aggressive Or overly nervous When you're inside their unit- respect the unit it is their home.

Beware of bedbugs getting on your clothes and you transferring them back to your own home- if you wear a haz mat type suit the renters will feel like something is wrong and feel very uncomfortable- but in some heavily infested situations it might be called for.

Remember you are inside someone's home no matter how disheveled or filthy it is it is still someone's home- respected it as such.

Be careful you do not let the pets out the door when you open the door. Don't leave the front door open when you're inside, close it behind you And make sure the management representative is inside with you at all times so you're never alone inside.

Look to see if HVAC filters are present and clean or are they missing or filthy.

Check the replacement date on the smoke detectors and the carbon monoxide detectors.

Good Luck!

[Austin James]

@Gino Barbaro 

Thanks for the comment Gino! I have this 47 unit under contract. The property is extremely mismanaged and the tenants are quite undesirable.

12 of the units are affordable housing tenants and 5 of them are on a master lease with this company who lets the homeless community use the units. (The shopping carts outside are a sight to behold.)

The dilemma i face now is that I can’t decide if it makes more sense to embrace the c class identity this property gives the impression of, or put a lot more into the renovation, get better quality tenants and convert it to the B class property that the building (and the area) should/could be. I own a construction company within range of the property that can handle the project.

90% occupied, the yearly rental income is around 460k with 336k NOI. Located in Morgantown WV

I’d love your feedback

[Gino Barbaro]

@Austin James

From what you're describing, it is not a c property. It is lower. I would check the median income of the area.

It is a function of price and return on effort. Is it worth buying the property, doing all the work, taking all the risk for the deal to stay at a C level.

I don't believe that expenses on the property are only 2,600 per unit. That NOI is definitely much lower.

Hope that helps

Gino