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Updated over 5 years ago,
Seller Concessions based on multifamily inspection
Hi BP'ers,
I recently have an inspection done on my first 25 unit MFH under contract in Houston TX. It is a 1970 single-story, garden-style brick MFH ( 3 building). As part of the general inspection report as well as other specific inspection '' like roof, Foundation, HVAC" , following are the major finds:
Foundation inspection: I understand with 50 years old building in the Houston area, there is a possibility of some settling. however, 2 out 3 building has significant sloping backward causing cracks in walls and floor. Likely cause with inadequate drainage of rainwater in the backyard.
Water drainage issue: Water pool in backyard with nowhere to drain causing foundation issue. Inspector suggested installing french drain or pumps to drain.
Roof inspection: 2 out of 3 roofs are old roof and 1 is a 3 yr old roof. all have leaks. Roofer recommended replacing old roofs (beyond repairable).
plumbing: All are galvanized pipe.
Interior unit inspection: 8 out of 25 (32 %) of units are in rought condition which needs heavy upgrade.
During the initial tour, the seller showed only 1 unit (probably better looking one, in the new roof building and least foundation issues) to us to estimate our rehab budget. Clearly we underestimate the rehab budget on 8 units as well as major capex items. Our rough estimate to fix all issues is in six figures.
Question: Is it reasonable to ask seller concessions on all the above items to fix it? Or these issues are typical to the 50-year-old building and you choose not to fix it. What I was told by maintenance/PM staff during the inspection, these issues were inherited by the current owner and they choose to operate with band-it solutions on capex items.
Also for the future, how to do I make sure, I capture major capex items before going under contract.
I just want to get an opinion from experience operation/syndicators? Thank you in advance for your help.