Originally posted by @Marcus Robert:
Not that it cant be done (because I currently do it), but I think I'd first ask around and see if there are any good property management companies in the area you are looking to buy the multi in (Just in case). If not, I wouldn't do it (my opinion). Then since its a different area, I would get 12 market comps on what multi's are going for coupled with doing the income approach with (1-2% rule) and see if the quick numbers work. If yes, 3 years of Schedule E's from the seller and look at 50% rule and see of taxes and water etc... makes sense. Lead Paint?? When taking a look, bring contractor and if you can plumber and electrician and devise your capex, deferred maintenance and room for forced appreciation list. The rest is protocol. Good Luck:) MR
Thanks, Marcus! I appreciate the suggestions. I will take a look at Property Management options but assume that they aren't plentiful in the area. It's a small area. Also, market comps are going to be difficult to come by as the multifamily properties are limited in number and those that do exist are for sale. The two had been doing fairly well for several years but took a direct hit when it lost two manufacturing facilities a few years back. Since then, apparently, the area has been in significant decline. I visited over the weekend to get a feeling for the area and talked with a few people who have some real estate experience in the area. They are convinced that the area is rebounding evidenced by the opening of two new manufacturing business with relatively substantial job creation for the area. The two multifamily properties that I am looking at are currently 100% occupied and excellent buys. But, the health of the local economy, given the small town dynamic, is of course directly tied to the availability of jobs. Thus, if the jobs leave again, i would be in the same position as all of the other people that have their properties listed. The prices are cheap. occupancy still seems to be steady. But, the town feels like everyone is trying to get out. Again, thanks for your suggestions. They were helpful.
Justin
