16 Unit Multi Family Analysis

[Donald Hlava]

I am looking at an off market 16 unit complex - I have never done a multifamily analysis but have enough cash for the option to leverage or buy outright. Recommendations on how to assess MF properties?

[Jill F.]

Expenses
get taxes from county. look at current valuation and you should have a good guess at how much it will go up based on purchase price.

Find out what expenses are paid by LL

Verify which utilities are separately metered; get average winter/summer monthly costs from utility company for any 'house' accounts

Get quote per door from your insurance agent

Get a quote from your landscaper (find out what they pay)

Get a dumpster quote if you don't have city trash bins

Find out if there is a parking lot sewer fee

Find out rental registration requirements and costs (can be both county and muni)

Income:

Get the rent roll,

In the contract require that you get estoppels signed by tenants and current owner saying amount of current rent, security deposit held, past due balances, and spelling out any promises for additional work/upgrades (there shouldn't be any). 

Ask how many tenants usually pay on-time. How many tenants are current in their rent.

Other due diligence

Check for building code complaints/violations pending

Look at rents in the area (within a couple blocks) Look at amenities, look at crime rates. Is there upside on the current rent? How many vacancies?, are vacants in rentable condition?

Ask if there is an active bed bug infestation and if not has there been an infestation in the last year.

That's what I do