Viewing a 15 Unit Muti-family tomorrow. What do I need to know?

[Lewis C.]

I am viewing a 15 unit Apartment complex tomorrow here in Memphis. My business partner and I own quite a few SFR, Duplex & Triplexes but nothing larger. What information do I need to gather from the agent / seller, and what additional due diligence do I need to do when evaluating this property versus when we evaluate SFR & Duplex? Thanks in advance for any guidance!

[Account Closed]

Hi @Lewis C.

Larger multifamily buildings are a far cry away from SFR, and as you might expect, the due diligence is much more involved.

For starters, all mechanicals in the building need to be evaluated intensely. Is this a boiler building where owner pays heat? When was it last replaced if so? What type of roof is currently installed and what is the condition? How much electrical service does each unit have? 60A? 100A? What is the condition of the parking area, if any? Do they currently charge for parking?

What is the unit mix? Is there room to add more bedrooms to any of the units to increase rents? What are the other buildings renting units for in the area? Is this a value add opportunity or a stabilized deal?

I'm sure the BP podcast has some great information on due diligence. Kevin Bupp also has a podcast episode dedicated solely to due diligence. 

Best of luck.