Looking at first small complex-Any Advice

[Chris Svendsen]

I received a text from my realator in PA yesterday that he just got a listing for an 11 unit apartment complex and wanted to know if I was interested.  Heck yeah I am!  Not on market yet, have a couple weeks till hits market, but I am getting into building this weekend to do a walk through of propety and look into the units.  Currently 7 units are rented and 4 others are in need of rehab and have been used as storage by the property owner.  So far know nothing other than its a brick building, rubber roof, has had new heating system installed in last couple of years and current rents is about 3100 a month.  

I am making a checklist of items to look at in each unit, covering all items for unit from flooring type, need to replace, overall condition of unit, specific items such as doors, windows, cabinets, etc.  Will be looking at each unit of what is going to take to get to my standard when rolls unit over.  Same with the vacant units.  For the property I will be checking out mechanicals, structure, piping types, drain piping, HVAC system, overall property condition, and work needed.  I will have a contractor with me to look at structure of building and this will not be the only inspection I do but anything big you can suggest I keep and eye out for would be great.  I be doing this saturday morning.  If I get this list finished tomorrow I will post up for critique.  Also, if any tenants are in units is it acceptable to ask them if they have any concerns with property that need to be addressed?  At time current residents seem to be very forthcoming with info adn can find out a lot from someone if you give them the opportunity to speak. 

Thanks in advance for any advice you can give.  

[Chris Svendsen]

Originally posted by @Luke Miller:

Originally posted by @Chris Svendsen:

Originally posted by @Luke Miller:

@Chris Svendsen take a look at financing too. Generally commercial terms for small, older buildings aren't great right now so take that into account. You'll need to look at financials and see how it's actually operating. If your self-managing it could be good, but professional management might have a different opinion of what it will take to operate than the current owner. 

Good luck, let us know how it turns out. Feel free to shoot me a message if you have questions. 

 Thanks for input.  Financing is hurdle I am wondering about for sure as this is so small limits options.  I have a local bank in area I used for another unit that does commercial loans, so hoping I will get some help from them.  Thanks for offer of help I may be reaching out at some time.

 If you have a local bank (and you're local) they are generally a little more fair with their terms. It gets much harder when they don't know you, you're out of state, and the properties is older. I was being quoted 6% 20 year am. and 7 year loan on something similar to what you're describing. Killed the deal. 

After looking at place this weekend, if it looks good I will be calling bank first thing Monday for sure.  Without reasonable finacing I be out of market.  I am hoping that since already have one property with them and that they do in house financing I have good chance of getting something attractive.