Got 11 unit under contract.....Oh CRAP, NOW WHAT!!!!!

[Chris Svendsen]

Well, I have been working on getting an 11 unit multifamily under contract for last few weeks.  Happy to say that officially today I had my offer accepted and now moving towards closing.  That being said I have lots of questions and wanted to see what you all think and have to say.

First, I will be using a HELOC from another investment property that I have to cover the down payment on property and closing cost. I estimate that to be around 10-12.5K in closing cost and 30k in down payment. Got a decent bank offering me 5.95%, 5 years fixed, amortized over 25 years commercial loan. The financing side I think I am doing okay. Questions come up on how to proceed with rest.

I have a trusted friend and contractor who will be doing the repair work on property so we will be doing a walk through of property again to formulate a game plan for repairs.  I was going to have the Electric, Plumbing and Drains, Heating System, and Roof all inspected by independent contractors in their fields.  Any areas I should be looking out for on a small multifamily during inspections? 

Other items I will be taking care of is talking to electric provider to make sure that having Meters inside a door accessible from the outside of the building is not going to be a problem. Currently the meters are not on exterior of building but on the inside of the building.  We will also be talking with planning and zoning to go over planned renovations and make sure they do not require building be brought up to current codes with the renovations we have planned.

Once we get to settlement my plan is to provide tenants on how we will collect rent-Check, Money Order or 2 different forms of online payments, plus how to contact us in emergencies and for repair request.  Short term Plan is to assure tenants that for time being we will keeping things the same for existing tenants as we renovate the property.  Long term we will be increasing rents on renovated units, charge back electric usage to tenants, and increase lease amounts on long term tenants.  Some have been in building since 2006 with no increases in rent.  

I would greatly appreciate any other items you think I should get inspected, or info I need to gather during my due diligence period. One item I am not sure if going to do or not is site environmental testing.  One bank required it as they have found some rather nasty things around properties in town and others have not required.  Do I spend the money and get testing done to see if the empty lots included with sale are clean or am I better off with a don't ask don't tell thought process at this point. In future may develop lots but for now just going to leave open.

I think that covers it for now.  Surely more questions will come up in due time.