14 Steps to Multifamily Acquisition - Step #6 Tour The Property
Introduction
When it comes to investing in multifamily properties, it's all about foresight. And let's be honest, who wants to invest in a property that's a dump with no chance for change? No one, that's who. That's why property tours are extremely crucial! It's your chance to take a closer look, inside and out, and ask all the important questions to make sure you're prepared and positive that this property is the right move.
Now, you may be thinking, "I've already seen the pictures online and the property seems fine." But there is no way to get the skinny without going there yourself. Property tours are worth their weight in gold. Make sure you show up rested (do not come straight from a red-eye flight, trust me) and ready to walk and talk.
So, what are the benefits of attending a property tour before making an offer?
Let’s dig in…
Informing negotiations: Checking the current state and condition of a property can help you determine a fair price during negotiations.
Discovering deferred maintenance costs: You'll have a better understanding of the potential costs associated with any maintenance tasks that have been postponed by the seller.
Determining capital improvement planning: You'll be able to come up with a more accurate long-term plan for updating fixtures and systems, such as fire control systems, alarm systems, HVAC equipment, parking lots, etc.
Assessing opportunities: You'll have the chance to evaluate whether you can add any cool amenities, update the property, and offer more accoutrements to attract residents and make the current ones more enthused. This is near impossible to do from afar.
Connecting with current residents: You'll be able to ascertain whether you'll need to reposition any residents and if it's possible to find residents that meet your personal screening criteria in that market. Talk with them! Find out the tea. The good, the bad, and the ugly.
Determining the seller's motivation and degree of honesty: By touring the property in person, you'll have a better understanding of the seller's true intentions and reasons for selling. Is the OM a gross misrepresentation?
Walk and Talk
During the property tour, you'll be accompanied by the listing broker. It's their job to show you around and answer any questions. And trust us, you'll have plenty of questions! The tour will likely only last about 30-45 minutes (or more depending on size), so make sure to maximize your time and ask to see everything. Bring your phone for photos, a pen and paper, or an iPad. Whatever your preferred method of documentation. Also, write down questions well before the tour so that you can tick them off quickly. I usually use my time on the plane to do this.
My favorite part about touring a site is the opportunity to speak with everyone. This includes the residents, employees, on-site managers, and maintenance staff. They can provide valuable insight into what to expect upon purchasing the property if you decide to do so. It is crucial to strike up a conversation and ask all of your burning questions. Ask residents what they like about living there. Ask them what they would add if they could. This will be helpful when thinking about the value-add amenities. Speak casually with tenants and employees or on-site managers when possible. Ask them what is frustrating and what they do not like (trust me, they will love to tell you). They can provide valuable insight into what to expect if you decide to purchase the property.
Now, let's talk about what to look for during the property tour. When it comes to the outside, here is a brief guide…
Exterior:
Start by sussing out the neighborhood. Arrive early and take walk or drive around. Notice its proximity to supermarkets, coffee shops, bus stops, etc.
Walk the entire complex and look for:
Late-model or in-disrepair cars, or cars parked on the lawn.
Signs of uncleanliness and neglect, such as overflowing trash, poorly maintained common areas, damage to the structure, cracks in exterior walls or foundations, mold or mildew, unsafe sidewalks, railings, steps, etc.
The roofs - check for any signs of disrepair. When was it last replaced? Are there patches and watermarks? Roofing is a major expense and you must asses its condition before purchase.
Building doors - are they propped open, which could be a security issue? Are they old and banged up?
Other issues such as standing puddles of water, odors, evidence of fire damage, etc.
Is there a pool? and if so, is it in usable condition? If not, ask why!
Interiors:
When it comes to the inside, make sure to tour the interior thoroughly. During this time, be detailed in your notes and think about value-add opportunities. Small clues can allude to much bigger and more expensive structural issues. Make sure to plan ahead and make sure you wear comfortable clothes and shoes. More times than not, you will enter derelict and “offline” units that are extremely dirty. Be prepared, and here is a brief guide…
Take the time to tour as many of the interiors as possible and bring along current maintenance staff if they are available. Their word is gold.
At a minimum, ask to see a residential unit of each unit type (studio/efficiency, 1, 2, 3 bed)
ALWAYS ask if there are any “down” units!!! This could make or break the deal!
Look at the entrance:
Is it inviting?
Is the lobby and mail area clean?
Are unit numbers clearly visible?
Is there an entryway security system? Cameras and controlled access?
Do systems meet life safety requirements?
Is there proper lighting, egress, and exit signage?
Is there a designated area for securely accepting package deliveries?
Check if common areas are clean and in proper working order
Inspect property amenities and facilities like laundry and fitness areas
Check out the boiler room
Look for dated inspection notices
Check for rust, disrepair, or safety hazards like poorly stored flammable materials
Elevators and fire extinguishers should have current inspection notices
Once inside a unit, look for signs of wear and tear
Look for cracks, stains, and mold on ceilings (very important)
Check windows, floors, and doors
Check the aesthetics of counters, flooring, fixtures, and hardware.
Inspect the type of plumbing and electrical. Older buildings’ plumbing issues could sink your cash flow ship if they are cast iron!
Don’t forget to check other areas like back stairs and storage units
Look for bulletin boards and management signs
Check for signs of pests or traps, noise levels, and the smell of common areas. Ask about current pest control in place
In conclusion, a property tour is invaluable and it cannot be excluded from your buying process. Even if you are not completely confident, it is important to act professionally and show a genuine interest in the property and the people you meet.
Remember this tour is your chance to make sure you're getting the full scope. It's your opportunity to get an in-depth look at the property, ask all the important questions, and determine if it's worth your investment. So, grab your notepad, throw on your work boots, bring your sense of humor (because let's be real, some of these properties can be a real hoot), and get ready to tour like a boss!
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As a team at Groundswell Assets, we are passionate about helping our partners achieve their financial goals through multifamily real estate investing. We understand the importance of making informed decisions and finding investment opportunities that deliver outsized returns. That's why we are committed to providing unparalleled investment opportunities and expert guidance to our partners.
We believe that multifamily real estate investing is a powerful tool for those looking to grow their wealth and secure their financial future. And with our access to top-notch deals, extensive industry knowledge, and a commitment to delivering results, we are confident that we can help you reach your investment goals.
So if you're ready to take control of your financial future and join the ranks of savvy investors, drop us a line. Our team of experts is standing by, ready to help you make the most of this exciting investment opportunity. Don't wait - secure your financial future with us now.
