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The best way to determine the future performance of your investment property is to evaluate its past track record. Don’t just close on a deal that will take large amounts of money without measuring its future success. You should also get access to the list of Vendors currently being used at the property.
Checking the rent roll is important because you should ensure the lease duration of the tenants matches the leases. The rent roll shows a schedule of rents, the amount each tenant should pay and the total that has been received. Many investors tend to neglect it, but it very necessary. Also need to make sure you’re not to have challenges when you start managing your multifamily property. Check if the rents are paid on time and any arrears.
Get the copies of the leases and ascertain that everything is as you expected. You don’t want to find out later that there is a tenant with free rent at the back of a lease. Check it out yourself and ensure your investment is safe.
Walking every unit for visual inspection of the multifamily property is a must. While it may only take you time to do the unit inspection, a professional inspectors are preferable because that is what they are good at it. Let the units, utilities and exterior be inspected a report be prepared on the condition of the units.
The cost of repairs and improvements on the property are not easy to determine yourself. Whether you have experience on the same or not, it is good to get quotes for the large items that will require improvement and include them in your property improvement scope.
One of the sure ways to get to know more about a property is checking the tax data. Look into the tax bills of the current and the previous years. Check the date they were paid by the seller.
1. Knowing the market is one factor that will affect the success of your real estate business. Learn more about the micro and macroeconomics of your market. Check the population and employment growth as well as the crime level. Knowing the strength and diversity of the market will allow you to make an informed decision on the multifamily property.
2. You need to do a thorough analysis of the competitors in your area. Have a list of properties around your multifamily building and analyze them along with the rent they charge. What is the quality of the properties in the neighborhood?
3. Do you know your tenants? Who are your potential tenants for the next decade? Demographics will help establish the viability of the multifamily property investment.
Another very detailed list can be found here:
https://theresabradleybanta.com/wp-content/uploads/2012/06/due_diligence_checklist.pdf