My case studies for multi family units

[Ray Williams]

I know that I am years away from being able to even look at the below properties but while I work to get there I plan to learn as much as possible and yes I know that a beginner should be looking smaller, however learn big and start small. I want to know what questions to ask when looking at apartment complexes as well as how to properly evaluate them for profitability.

Property 1

Asking price unknown at this time.

APARTMENT HOMES - real estate - by broker - apartment real estate sale The complex has been fully renovated, each unit receiving new windows, new flooring, new paint, updated kitchen and bath, new appliances, and new HVAC.

-The 64-unit community offers 2 bedrooms, 1 bathroom, and washer and dryer hookups.

-A pool and clubhouse are available to residents.

-The current average rent is $773.00 per month but all new leases are now signing at $795.00.
There are pet friendly units are available.

-This is a gated community and all buildings have coded, secure access.

Property 2

Asking price $1,300,000.00

62 units-- 21 efficiency 34 1 and 2 bedroom and 7 single family homes that are adjacent to the the main complex. The complex was a motel at one point and converted to apartments (not sure when).

I am an open book and would take any advice positive or negative. As I said I have a couple years before I get to the point that I would be financially able to start looking at investments of this size. The owner of the second property will talk to me about the property as a learning tool only as well. Before I talk them however I would like to know what I should be asking. I do know how to read the books as long as they have decent records. 

Thanks in advance for any help you are willing to give.
 

[Charles Seaman]

@Ray Williams the best way to properly evaluate these deals is to underwrite them.  Most people use some type of spreadsheet based program for this.  They either create their own or buy one that's on the market.

I bought the one in the link below a few months ago. It's called Landlord's Cash Flow Analyzer Pro and it costs $99.95 (it includes everything but the IRA module).
https://www.rentalsoftware.com/real-estate-investing-software-features/

Another really popular one that a lot of syndicators use is Syndicated Deal Analyzer, which was created by Michael Blank.  There's a link below to it if you want to check it out.
https://themichaelblank.com/syndicated-deal-analyzer/

When you're looking to buy properties (and this applies to properties of all types and sizes, but especially to larger commercial properties), think of your job as being similar to a private investigator.  Your job is to uncover anything that could potentially be a liability or cost you money at some point.  So when you're speaking with brokers or sellers, you first want to establish rapport and then you want to get them to give you all of the information that they're not necessarily looking to share.  For example, the OM might include really good pictures of the property because they didn't include any pictures of the siding that's in poor condition and needs to be replaced.  So you want to get them to divulge information like this before you waste your time going out to visit the property.

Conversely, you also want to do the same with any potential upside that the property may have.  So if the broker tells you that rents can be increased by $140 per unit, then you need to call all of the nearby properties in the area and find out if the information that they're giving you is correct.

Always start with your financial analysis before you ever waste time going to check out a property in person.  If it has potential, then check it out in person and keep digging further.