Checklist to buy a Multifamily building or an Apartment complex

[Syed Naqvi]

Hello Folks: I am trying to make a checklist in which I want to include almost all the points to be considered in buying a Multifamily or an Apartment complex of 40 or more units. This checklist can anyone use to quickly evaluate in moving  forward in the deal or just leave it. Request from the experienced Multifamily Family Investors to provide their inputs. At the end, I will make a final Checklist using all the inputs.

Thanks in advance for your value able inputs.

[Lee Ripma]

@Adrian Fajardo - The quick and dirty expense ratio will vary both by market and by building age. Also it's pretty important to know what is submetered and what you are paying for. Buying apartments is not as easy as some would make it seem. You need more than a basic rule to be able to buy an apartment and make money! 

 @Syed Naqvi

If you PM me I will send you my complete 27 point checklist. This is just a checklist from one of those 27 points with the items that I request from the listing broker. Note that this is specific to LA. If I posted the whole checklist it would be too long for a forum post. 

• Current Rent Roll
• Copies of all leases including rate, security deposit, lease terms, unit number, start and end date
• Notices of 30-day rental increases (under rent control can only be raised 3-5% per year). 3% if tenants pay their own utilities, rents can be raised 1% if the landlord pays for gas, and 1% if the landlord pays for electric. So master-metered buildings the rents can be raised 5% a year under rent control. For Section 8 tenants the rent increase notice is 90-days. It is important to make sure appropriate rental increases have been served to tenants.
• Proof of any additional income such as laundry, parking, storage, etc.
• Any balances due, tenants with late payments still due
• Identify any existing evictions in progress
• Certificate of Occupancy from the City of LA
• 9a Property Report
• Natural Hazards Disclosure Statement
• Copies of all current insurance policies and insurance company contact info
• Loss run from the insurance carrier (my insurance broker requires this from seller)
• Copies of ad valorem tax statements covering the Property for the last twelve (12) months, if any
• Copies of electric bills for last 12 months
• Copies of gas bills for last 12 months
• Copies of water and sewer bill for the last 12 months
• Copies of trash bills for the last 12 months
• Copies of any vendor service contracts (common ones include landscaping, interior cleaning, laundry, fire alarm monitoring, and pest control)
• Copies of any environmental studies affecting the property, if any.
• A list of anything that will not convey with property (common items include laundry machines and appliances owned by seller)
• Copy of current management agreement
• Copies of all existing surveys of the Property, if any.
• Copies of all warranties for appliances, equipment, utilities, roof, paving, pool, etc., if any.
• Copies of the last three years’ profit and loss statements
• List of all capital expenditures in the last 3 years
• Date of systems updates, if known (plumbing, electric, roof, HVAC)
• Preliminary Title Report
• Copies of the most recent title insurance policies, if any.