What to look for/ask when walking through rental property?

[Mitchell Cochell]

I'm a new investor looking for small multi-family rentals. I'm walking through a duplex next week that looks promising and I want to know what I should be looking for/asking the agent & owner. I know the big things to ask such as roof, HWT, windows, ac, etc but I'm wondering if anyone has some advice on other things to look for that could end up causing problems down the road. Any help would be appreciated!

[Roy N.]

@Mitchell Cochell

If you are walking the property than your initial analysis indicated is it potentially worth underwriting.

When you actually walk the property, you want to look at the primary building systems: envelope, plumbing, electrical, HVAC.   If you are new at this, bring along someone who is experienced (contractor, a seasoned investor, etc) and knows what they are seeing.   On an initial walkthrough, you are making a list of the immediate and near-term capital expenditures that are going to be required ... you'll then factor these into your underwriting and they'll influence any offer that you may make.

With a small property like a du/tri/quadriplex, the key things I am looking for on an initial walk through are:

1) Is it a conversion or purpose built;

2) Are utility services (electrical, gas, water, etc) common or separate to each unit.  Are common areas delivered/metered separately or tied to one of the units;

3) Is heat and DHW common or separate for each unit;

4) Type of fuel used for heating (current and any signs of a different former fuel type);

5) roof - type of covering, age and condition;

6) Fenestration: Type, age and condition of windows and doors. 

7) Envelope - insulation, cladding, etc.

8) Value add amenities: large decks; garages; outbuildings.