Analyzing a multi family deal

[Jeremiah Struble]

I am looking for pointers for analyzing an 8 plex multi family property. What sort of questions and information is needed when talking to a seller?

[John Warren]

@Jeremiah Struble I would focus mostly on the expenses and how they are structured. Who pays the water, heat, hot water, cooking gas, trash, common area maintenance, etc? The pro forma rents are pretty easy to figure out in a primary market like CO, but understanding what expenses you pay can be tricky. 

I run into this all the time here in Chicago when I run numbers. Older buildings with boilers, central hot water tanks and master metered cooking gas can be very expensive to run for the land lord. Often times 55-75% of your revenue will go towards expenses. On the flip side, there are newer properties that I see where the tenant pays for heat, cooling, hot water, and even water in some areas. This dramatically increases the owner's bottom line and it also makes it much easier to figure out what the NOI will truly be.