#147: Tips for Due Diligence on Multifamily Assets and Apartments

Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.

So, hey, guys, what’s going on? Welcome back. It’s Josh. Welcome back to Accelerated Investor. Man, whether this is your first episode or your hundred and fiftieth episode that you’ve listened to, thanks. Just want to say thanks. I am always honored to be inside of your head, inside of your ears, sharing strategies about real estate investing, entrepreneurship, leadership, raising capital and talking about real estate. It’s fun for me to do this, to share. 

And today, what I want to do is I want to talk specifically about a case study in a deal that we’re literally about to close. It’s going to close any day. It’s 80 units. I’m not going to give you the address because we haven’t officially closed it yet. But it’s 80 units. It’s in the Greater Cleveland area. It’s a C plus class building in kind of a C plus B minus type of area. Let me give you some of the numbers real quick on it. 

And what I want to do in this is tell you specifically some tips that I want to give you regarding the due diligence process. All right. I’m actually going to tell you some funny stories about our walkthrough, meeting some of the tenants in the walk through that we did and what we’re gonna be doing with this building as we go. So let me start by giving you the case study. 

So we’re buying it for three point seven four five million. It’s 80 units. Renovation costs is three hundred and fifty thousand dollars. Our holding costs and soft cost is about two hundred and forty thousand dollars. And then we’re actually paying ourselves one hundred and twenty-thousand-dollar acquisition and asset management fee. So actually getting paid when we buy it.  So all in is about 4.5 million. We’re getting a primary loan from Fannie Mae. The building’s already ninety-four. Ninety-five percent occupied. So we’re able to get a primary loan from Fannie Mae and Freddie Mac for three million. And we’re raising one point five million dollars from private investors. We’ve actually already raised that one point five million is actually sitting in my bank account right now. And we were able to raise that money in about 24 hours. 

We’ve got amazing relationships with private investors. We presented the deal. They committed to it. We’ve got 17 investors. Most people invested between 100 and 200 thousand. We had a couple of people invest fifty thousand and we got all the wires in for one point five million. So it’s amazing. So we just fully funded. It’s about to close. We’ve gotten the green right from the lender with Fannie Mae. They’re just getting through some of the legal stuff, crafting the loan docs. And we’re about to close. Which is awesome. So the current net operating income is three hundred thousand dollars. We’re going to beef up the NOI, the net operating income to three hundred eighty thousand dollars, which based on a six cap, puts the building value at six point one million. 

So we bought it for three point seven. It’s going to be worth six point one, which is amazing. Right. So we’re literally able to grow the equity, the profit in the deal by two point four million dollars. The plan is once it stabilized, six point one million to refinance it at seventy five percent loan to value and about 24 months payback. 

All of our private investors, all of their equity that they put into it, they’re getting a 10 percent return during stabilization and they’re going to get a one percent kicker at the refi, one percent refi kicker. So they’re going to get a total of 10 percent in year one. 10 percent in year two, plus a one percent kicker. So if the deal takes 24 months, it’s going to be a 10 and a half percent net return after everything is said and done. Here’s how it looks. 

We’re going to have a new loan on it for four point six million. We’re going to get about one hundred thousand dollars in cash out refi proceeds. We’re at one hundred and twenty thousand dollars in an acquisition fee. 

We’re also going to have about one point six million of equity and the net free cash flow after all of our expenses and after all of our mortgage payments and debt service is about one hundred twenty thousand a year. OK, it’s about a hundred and ten thousand a month. I mean, a hundred and ten thousand, a hundred and twenty thousand. It’s about ten thousand a month. So it’s amazing. It’s a great little deal. This is not for a lot of people like, oh my God, that’s a huge deal. 

This is a relatively small apartment. But in fact, this is the smallest of all the apartment deals that we own. Now, let’s talk about due diligence. OK? Due diligence on a deal like this is really what I want to talk to you about today. So we’ve got the deal brought to us. It was off market, was never on LoopNet. It was never on the MLS. It was never really marketed for sale. We got it directly from the listing agent. Went back and forth on different offer prices. We settled at three point eight million. So, as we said, that’s the three point eight million. The attorneys get involved. The attorneys put together the purchase and sales agreements. 

The purchase and sales agreements are always custom purchased and sales agreements, they’re never like boilerplate template agreements. So the attorneys do that. We agree on all the terms. We put up thirty thousand dollars of earnest money and we put up ten thousand dollars in a loan application fee and we sign on the dotted line and all of a sudden we’re in contract. Now the fun starts. When you’re in contract what happens now is the seller has certain due dates where they need to share all of their financial information. So we had a list of all the financial information that we wanted. We had a list of everything. And I’m not going to cover all that today. That’s kind of a long-winded discussion. I’ll do that on a different call. 

But on an apartment deal, we wanted things like tax returns. We wanted things like, you know, our operating statements. We wanted to rent rolls. We wanted copies of all the leases. We wanted all the bank statements for the last three years so we can rack out the rent payment. Compare the rent payment to the actual rent received and the bank deposits. All that stuff. So we got all that. We sat around this big, massive conference table. 

And we literally went through all 80 units. We put them all on a spreadsheet. We identified every unit. Then we identified and wrote down every tenant. Then we wrote down how long they’ve lived, we put in the spreadsheet how long they’ve lived in the unit. Are they a new tenant? Have they been there forever? Couldn’t believe some of these tenants have been there for twenty-nine years. Since like the nineteen nineties. Nineteen ninety-one. 

Then we looked at. OK, how many late notices are these tenants getting. What are they paying for. Rent. OK. Is it a three one. Is it a two one or a one. One. So the three bed two better one. But we put all that in a spreadsheet. Then we looked at, OK. Every month. How much rent was collected? And then we compared that to the deposits in the bank. OK, it all ticked and tied out. We looked at what did they say they’re paying for their insurance. And then we looked at their insurance policy. We looked at what did they say they’re paying for taxes? We looked at the tax payments and we verified the taxes on the auditors Web site. 

We looked at their snow removal contracts and their grass cutting contracts. It all made sense. We get done with all that again. I’ll cover all that boring financial stuff in a different podcast. But now we get to schedule a walkthrough. All right. So the walkthrough is interesting. These are always interesting because now you’re walking to 80 units and you’re walking into someone else’s home. All right. So imagine we should all show up. This is in the middle of COVID, so everybody’s got a mask on. Some guys are wearing gloves. Everybody’s got their hand sanitizer, multiple masks. 

You know, I’m in like a golf shirt, jeans and boots. And the owner has put on everybody’s door 48 hours in advance and said, hey, there’s gonna be inspections. On this date, he just called it inspections, right, he doesn’t say I’m selling the building. The new buyers coming through. He says inspections. There’s gonna be inspections on this day. So when we show up, everybody’s been notified. All right. So we all meet in the parking lot. We make our plan of action. We meet with the seller. We meet with the broker and our team. And there’s four of us on our team. It’s me, Glenn Tyler, my partners. And then Tim Roth, our rehab project manager, and then our broker, his name is Will. 

So we all meet in the parking lot. We make a plan which building I’m going to go into. First, second, third. All right. So now we walk into the units. So we walk into unit number one. And what happens is Will is knocking on the door like this, maintenance, maintenance. People start answering the door to said, hey, maintenance, we’re here to inspect your unit. Well, imagine there’s five of us, five all maintenance guys, all standing in the hallway. And then there’s one tenant. Some of these people have kids and people are married. Some people are not. People live with their parents. And like five of us walk into the first unit and we’re all looking around. 

It’s kind of weird. So and again, this some of these are like one bed, one bath or five hundred square feet. So this is in the middle of COVID. There’s like five of us walking into a unit and there’s a tenant, sometimes multiple tenants in a unit. So I got masks on. So what we’re looking for. So here’s some tips we’re looking for. We walk in the unit. Number one is, is the tenant clean or dirty? 

That’s it, because if a tenant’s dirty, if they’re not taking care of their unit, we’re gonna get rid of them and kick them out. We want people who are taking care of their unit. I don’t care how much money they have. You can be poor and not have a lot of money, but be still be clean. You can still respect your stuff. You can still respect your environment. You can still, you know, put your shoes in the corner. You can still wash your clothes, hang up your, you know, golf shirts and your t shirts and put your stuff away and make your bed. You can still do that. 

Then there’s other people who have money who are just dirty, nasty people. So. First thing we’re looking for is clean versus dirty. And we have so that spreadsheet that I made and Google, I printed that off, gave everybody a copy. So now we’re in unit number one and we’re marking them down cleaner, dirty. 

Then we’re marking down. Is it the unit turn? Are we going to turn the whole unit, meaning all new flooring, all new paint, new kitchen, new bathrooms, new plumbing, new new appliances, new everything? Is that a full unit turn? Is it no unit turn at all? Like we don’t have to touch it? Or is it a half turn? That’s really it. The other piece that we want to look for every time we do an inspection is leaks. OK. Primarily looking at the kitchen sink, the bathroom sink, the toilet and the bathtub. OK. So we’re looking for active leaks. So that’s really all we’re trying to do. All right. So first unit turn, we all go in. All five of us pour in there. We walk out. Yeah, it’s a full turn. And the tenant was clean. 

We go to the next door, maintenance, maintenance guy answers the door again. Two or three of us walk in. Again, we’re looking for clean or dirty. Full turn, half turn or no turn. And we’re looking for leaks. We’re looking for, again, leaks. Kitchen, bathrooms, showers, toilets and sinks. We walk out, we meet in the hallway. It’s a full turn. The tenants dirty, the tenant’s got to go. And there’s active leaks. We go into the next one. OK. Now, it’s starting to get interesting because. One of the guys comes out and he’s like, who are you guys really got here with maintenance? And the guys like maintenance? And he kind of looks at us cross-eyed, kind of all staring at us. You guys are all with maintenance? And there’s like five of us in the hallway and we’re like, yeah, yeah, we’re all with maintenance. 

And the guy’s really skeptical. All right. So one of us goes into that unit, just one of us. And again, looked for the same thing: full unit turn, half turn, no turn clean or dirty, leaks. That’s it. Guy walks out. We kind of all meet the hallway and the tenant’s kind of poking his head out to the side of the door, kind of looking at us like, what are those guys doing? Like, what are they talking about? Right. So, you know, we start to get okay, let’s get smart here. Right. It’s the middle of COVID. There’s five of us. Let’s divide and conquer. All right. So now Will the agent, he’s got keys to all the units. 

So I’m like alright well, we’re all going to start pounding on different doors. So we go into a building. We’re going to a floor. There’s like four units on a floor. Let’s each pound on a different door. Let’s each go in. Knock on the door. Maintenance, maintenance. Let’s each go in and let’s, you know, we trust each other. So, again, let’s all make the same decision. Full turn, half turn or no turn. Clean or dirty, leaks or no leaks. And mark those on your sheet. So now we start to divide and conquer. Bang, bang, bang. We knock on the door. Now there’s four of us all knocking on four separate doors. My partner, Glenn, had to leave a little early for another meeting. So there’s me. Well, Tyler and Tim were all pounded on different doors. We’re all walking in with masks. 

And of course, when you’re in a unit, if that unit is occupied, you want to start talking to the tenant a little bit, ask him a couple questions. Hey, how are you? Now, remember, we’re also this is like 10 o’clock in the morning. So we’re also looking at are the tenants home? Like, how many these tenants are home? How many have a job? 

So basically what we’re telling people is we’re with maintenance, and so we’re looking for leaks. We’re with maintenance and we’re looking for leaks because that’s really what we’re there to do. But we’re also there to see do we need to do a full turn, half tur, is it clean or dirty, OK. And these are the tenants home. Do they have a job? 

And so we’re meeting up in the hallway after. Now, we’ve got four of us at the same time, all meeting in the hallway. Yep. That unit was clean. Yep. That unit was dirty. That unit’s a full turn or a half turn. Yes, there was an active leak or no leak. And we’re all taking notes. Now like we move to the next building. Next building. Knock on the door. There’s no answer. Knock on the same door again. There’s no answer. Maintenance, maintenance. 

And we let ourselves in because we have the keys. We’ve notified the tenants. Well, this one woman comes storming off of her balcony. Now, she watched us walk in the building. Right. She was on the balcony. She saw us all walking in. We all walk into her unit or we’re walking to that floor. We knock on her door and we all say maintenance, maintenance, we’re coming in. So first time it’s maintenance, we knock on the door. A second time it’s maintenance. The third time, it’s maintenance. We’re coming in and we key in. We walk in. We’re about to walk into the living room. She comes storming off the balcony and says, What are you guys doing here? 

You’re not allowed in my unit. We’re like, hey, we’re with maintenance. We notified you 48 hours in advance. Tenant landlord law says that we’re allowed to enter your unit whether you’re here or not. We’re here to inspect a unit for leaks. The woman turns to us and says, I want you to get out of my unit. Right now. I have a gun. 

OK. So I’m not very I’m not really sensitive to guns. I mean, I am sensitive to guns, but lot of people that I know own guns. A lot of people that I know are smart gun owners. Lot of people are afraid of all this crazy rioting, antifa, you know, protesting. So people have armed up. So when she says she has a gun, I’m like, oh, shit. 

But at the same time, I’m like, not a big deal. OK. So we don’t wanna upset the apple cart. So we’re like, OK. She’s got a gun. Let’s just leave. There’s seventy-odd other units to go look at. Let’s just go look. Let’s just leave. OK. OK. Everything’s kind of in the hallway. We’re like, all right. We did get a look at her unit. Her unit was actually really clean. We don’t know if there’s any leaks there. OK. And we couldn’t really tell if it was a full turn or a half turn because we couldn’t see the kitchen, we couldn’t see the bathrooms, but the unit looked clean, which was good. 

So maybe she’s just conservative. Maybe she does like strange people entering her unit. I’m not going to say she’s a bad person because she has a gun, because a lot of people I know have guns. So fine. She’s got a gun. No big deal. That’s her right. Second Amendment right. All right. 

So now we start again, we’re starting to divide and conquer. We start to move around. All right. So we’ve got one guy that’s looking at us crooked. We’ve got another woman that says she has a gun. OK, now we’re moving on to the next unit. We’re knock on the door. We walk in maintenance, maintenance. The next guy that comes out, the tenant, older guy, got to be 75, 80 years old. He can sell it looks like he maybe had a stroke or something was wrong with him. Like, you know, he had like saggy lip type of thing going on. And so he’s in a wheelchair. So now we’re thinking, OK, we’ve got this is the complexity, guys, of owning real estate that, you know, if you’re good at, it’s very, very profitable business. 

If you’re not paying attention to this stuff can definitely, you know, be a challenge. So we walk into this unit, older guy, guy can barely talk. He’s probably only got like six or eight teeth in his mouth, missing most of us. He’s gone. He’s much older. We knew that he was a veteran. We knew he was on veterans assistance. We knew that he was retired probably on like some sort of V.A. pension. Plus Social Security’s on a fixed income. He’s in a wheelchair. 

And so we walk into his unit and it kind of smells. You know, it doesn’t smell that great. We’re like, this is like, OK, let’s just get in and out. So, you know, unit’s dirty, OK? There’s an active leak in the kitchen. But the tenants been there twenty-five years. He’s a veteran. 

He served our country. And you’d immediately walk out if you didn’t have a heart, if you didn’t care about people. You just walk out. Be like, yeah, let’s evict that guy. His tenants, you know, his unit’s dirty. Let’s turn the unit. We can make more money if we just lease it out to someone else. But dude, we have a heart, especially the guy’s a vet. Like what are we gonna do here? Because normally that guy is somebody we would ask to move out so we could improve the unit and lease it for more money. 

So this is where you got to take entrepreneurship and your profit and loss statement, your revenue model, and combine it with compassion, some compassion and say, look, are we really going to kick this guy out? Veteran, fixed income just because his unit’s dirty? And it was really dirty, smelled awful. But whatever. I mean, that’s how he wants to live. That’s how he lifts. You deal with that. You walk out. We’re all kind of meeting in the hallway. We’re like units, really dirty. Got it. Smelled awful in there. But the guy’s a vet. 

I mean, Tim Roth, my rehab project manager, served in Fallujah in Iraq. You know, I think about Tim when Tim’s older, if Tim were ever, you know, on his own and on a fixed income, would I want to evict Tim? You know, like Tim’s thirty-five years old. Forty years from now. If Tim is on a fixed income, which he probably won’t be. But you know, let’s just say he is.

Would I want someone to give Tim the benefit of the doubt because he’s served in Fallujah, in Iraq, in the middle of an insurgency. You don’t know what this veteran, this guy’s story was 40 years ago, that he served in Vietnam. I don’t know. Got to have some compassion for people. It’s not all about dollars and cents. 

So we walk out of that unit. We’re like, OK, that’s a special star on that unit. We’ve got to talk to that guy, figure that piece out. What are we gonna do with him? But don’t make any decisions today. But after we own the building, we’ll figure it out down the road. We walk into another unit down the hall, same building, knock, knock, knock. Maintenance, maintenance coming in, coming in. We come in. All right. Now we walk into a unit like holy smokes. All right. So the guy’s been living in the unit for 20 years. It’s like one bed/one bath. You know, guy’s paying five or six hundred bucks a month. But the guy smokes and he’s been smoking for so long. There’s like that smoke oil that’s literally like running slow, like maple syrup down the side of the wall from the from the ceiling. 

The guy’s such a heavy smoker. He’s been in that unit for so long. He’s been smoking in that unit for so long. It’s literally like little. I feel bad for the guy, but he’s like trapped in a prison of cigarette smoke at his walls are like bra, like turning brown. And there’s like literally think about like maple sirup how it like runs down the side of, like, your plate. It was like on the walls like that, like disgusting. So we come out of that. But this guy’s younger, this guy’s like fifty-five years old so like. Yep. Come out unit’s dirty. There’s no leaks. The guy’s gotta go. Gotta kick that guy out. I don’t care how long it’s been there, the unit’s disgusting. 

Well then finally, last story. We walk into another unit, knock on the door. Now this is me, right. This is me, not one of the other guys. This is me. Walk in. Knock on the door. Maintenance. Nobody answers the door and the door again. Maintenance here for inspection. Nobody comes to the door. Knock on the door again. 

Maintenance, we’re coming in. So I can walk in the door and I’m in the unit. I don’t know if anybody’s there. I can’t see or hear anything. So I start walking through the living room. I walk over by the kitchen. I’m about to walk into the back bedroom. And this dude comes out of the shower naked with just a pink towel halfway around his body. And I’m like, oh, dude, sorry. Like maintenance. We’re here for inspection. I’ll leave. I’ll walk out. 

Well, the guy gets super pissed off. The guy gets mad, he’s like, well, yeah, I would think you would leave, you know, I’m like, yeah, I’m leaving. Like, trust me, I didn’t know you were here. We knocked on the door three times. I’m walking out, I walk out, I leave. The dude throws like a pair of shorts on and the dude goes storming to the management office, storming down to the management office to complain that we’re in the unit. 

And I’m like, all right, I’m not going back to that unit. I was able to see the unit though. The unit was in good condition. It was like a half turn. You know, let’s do carpet and paint in that unit, see if there’s any leaks and then we walk out. So I’m thinking a heart dude. I’ve got I’ve got one woman who threaten us, says she had a gun. I got another guy who’s kind of looking at us cross-eyed and doesn’t want us in his units because we look suspicious, because there’s five of us. I’ve got another guy who’s a veteran who is, you know, on fixed income. I’ve got another guy who’s a heavy smoker. 

I’ve got another guy who’s naked answering the door or not even answering the door, but coming out of the shower while we’re doing the inspection. We had another guy that we think was mining Bitcoin, like he had this big, expensive, massive computer thing behind his couch. And I don’t I didn’t even know what it was. But Tyler’s like, yeah, that dude mining bitcoin, I don’t even know what the hell that means? But he’s like mining for coins. I’m like, OK, so this is like six or seven of the units. 

Again, there’s eighty units. Now I’m only telling you the crazy stories here because like you know, sixty of the eighty units like were clean, you know, normal. Some of them are like a full turn, they just need improve. The former owner hasn’t improved them, the kitchens and the bathrooms in a long time. So we’re going to improve those units. So we come back and we make a plan. And we said, all right, here’s what we’re gonna do. We’re gonna turn 40 of the units full turn. OK. There’s about eight vacancies right now. We’re gonna turn those those eight vacancies and fix them up real nice and put people in those in jack up the rents. 

Then we’ve got another thirty-two units that we’re gonna wait and kind of organically see how people move out. And then we’re gonna turn that unit. Move out, turn that unit. Move out, turn that unit. We’re going to do 40 of the units that will get us to the six point one-million-dollar evaluation and then we can refinance. 

But we also decided that the other forty units that we’re not going to turn, we’re going to improve the bathrooms. The bathrooms, we noticed there were leaks there, active leaks or previous leaks in 40 of the 80 units. So that the bathrooms are a source of a potential liability, a potential problem and also increased utilities, increased water bill, sewer bill. So those other 40 were going to improve. By the end of the time we’re done, we’ll have 40 full turns. And the other 40 will have their bathrooms fixed up. 

And then we’ll be in a situation to increase the rents on all the units, either a lot, a big increase or a small increase in the rent. That’ll get us to that three hundred eighty thousand of NOI and then allow us to refi within two years. All right. That’s our plan. And so this due diligence process, you really even in due diligence, really focused on the site inspection. 

You know, when you go to those kinds of things, you’ve kind of got to be ready for anything, literally anything to happen. And so I’m not carrying a gun when I’m in there, but I’m ready for pretty much everything else. And as long as the owner notifies the tenants that you’re coming. Right. Be ready for anything in this environment. Again, we’re in masks. We’ve got gloves on. We’ve got hand sanitizer. We’re taking notes in the hallways. We’re taking notes outside. It took us about three hours to walk 80 units, maybe three and a half to walk 80 units. And then we came back. 

We went back to the seller, renegotiated the price because there was much more work than we anticipated. But we got the price dropped from three point eight million to three point seven four five million. So we got fifty five thousand off of the original agreed upon price. And we’ve got a great plan going forward. So that is our strategy. Now, here’s the takeaways. OK. So what did you learn? 

The takeaway is when you do a multi-family deal, especially the larger multifamily deal, when you go into units, you’re not looking to inspect every little bit. What you’re looking for is clean or dirty. What you’re looking for is the clean tenant you want to keep, the dirty ones you wanna get rid of. Number two you’re looking for is at a full turn, half turn or no turn. Are we doing a full turn of the entire unit, literally improving everything, you know, flooring, paint, kitchens, bathrooms, everything? Or are we doing a half turn? Maybe we just do the flooring and the paint and the bathroom. Kind of a half turn. 

Or are we doing no turn? We’re not gonna touch the unit. And then number three, we’re looking for active leaks. Okay. Active leaks, leaks behind the bathrooms, the showers, stuff like that. Those are the most important things. And just be mindful. Be respectful. You’re walking into somebody else’s home. All right. So I hope your enjoyed this case study of this latest apartment building that were buying at 80 Maple. I hope you enjoyed some of the tips that we’ve shared today regarding the due diligence and actually walking the units. I’ve got another 20 unit that we’re going to walk this coming Wednesday. I’ve got an 18 unit that we’re going to walk in 10 days. 

And, you know, just those three deals that we’re buying will put us at one hundred and twenty units just with these three transactions. That’ll take us over twenty-eight hundred total units, which will be exciting. Listen, if you enjoyed this podcast, don’t forget leave us a rating. Leave us a review. If you want to learn more about income properties, check the link in the show notes. And especially if you’re looking at residential multi-family, two units, three and four units. Check out our software Accelerated Investor Office and the free class, the mini course that we put together on how to build your personal net worth to over a million dollars in the next 12 months using some of the strategies that we talked about today and using our software. 

Also, don’t forget leave us a rating, leave us a review. Five-star rating review. Send us the screenshot and we will send you a free Accelerated Investor T-shirt. Thanks so much for joining me today on Accelerated Investor had a blast sharing this case study with you. We’ll talk to you next time. 

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I have a new 80-unit property under contract right now, so I want to give you an inside look into what a due diligence visit looks like. Once you’ve got an initial agreement inked, then the seller has certain due dates where they need to share all of their financial information, and that’s when the fun really begins. Just some of the things we’re looking at:

  • Tax Returns
  • Rent Rolls
  • Operating statements
  • Copies of leases
  • Bank deposits
  • And more

The visit to the property is going to give you an even better idea of what kind of condition theproperty is in. We always give the tenants a 48-hour warning, plus in the time of COVID, we’re definitely wearing masks, using hand sanitizer, and trying to be respectful of the tenants’ space. I’m looking for a couple of key data points when I inspect an apartment, and I’m going to let you know why these data points matter.

No matter how much you prepare for a property walkthrough, you need to be prepared for anything. And as I illustrate in this podcast, I really mean anything. Some of the tenants in my new multi-family have lived in the same apartment for 20+ years, and that can lead to some interesting unit problems. Tensions are a little high all around in the country, so a stranger walking into your apartment might be seen as threatening. You definitely want to be as transparent as possible about why you want to look at their apartment.

Once you’ve walked through an entire unit, you have a much better idea about how many units need a full remodel, a half remodel, or nothing, and then you can go back and renegotiate your purchase price. That walkthrough is vital is helping you understand the condition of the property and just what exactly you’re dealing with.

What’s Inside:

  • What we look for when we inspect newly purchased apartments.
  • Our deciding factors for keeping or evicting a tenant, and why you sometimes need to have a heart about this process.
  • I share the numbers on my latest deal, and why we were able to renegotiate the price.

Mentioned in this episode​

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