Use This Handy Checklist When Purchasing a Multifamily Property
If you’re considering buying a multifamily property, it’s a good idea to come prepared with a list of things to check and items to have. From understanding lease expectations to assessing the apartments themselves, this handy rundown will have you completely understanding your investment.
Look at The Rent Roll
A rent roll is a list of the rents due and collected from each tenant. Typically, the rent roll will include information about the tenant's lease term. Verify the rent roll corresponds to the actual leases.
When you're purchasing a multifamily property, request a copy of the lease agreements and confirm their accuracy.
12-Month Property Income and Expense Statement (T-12)
Do not be deceived by the numbers as they appear now or may appear tomorrow. The past performance is the most reliable indicator of its future performance. This may also reveal seasonal differences you might overlook, especially if you purchase in a new region.
Assessments of Units
Physically inspect each unit and the common rooms, utilities, and outside. But you do not need to do it yourself. You can hire someone, ideally a professional inspector, to conduct the inspection and give a report detailing its quality and any flaws.
Proposals from Contractors
Even if you have previously completed comparable work, you should not estimate the cost of repairs and improvements. Collect multiple bids on large, costly items, and create a work breakdown framework for all modifications.
Tax paperwork can reveal a significant deal of information about a property. Assess the status of the previous and current year's taxes. You can also get a glimpse of why the seller is selling this property through the taxes billings.