Tips for Buying a Multi-Family Property
If you’re considering investing in a multi-family property there are some key things to consider when determining if it’s a good buy for you. Here’s a quick list below:
- Are the units occupied? How much does each occupied unit rent for? On the vacant properties, how long have they been vacant?
- Are any tenants on government subsidized housing? This may affect what you can/can not do in terms of rent increases and the overall demographics of the complex/property.
- What are the lease terms for each tenant? At a minimum, when did they move in and when does the lease expire? If you have tenants that have been in there for a long time, expect some work needed on those units. Also, in your plans to raise rents, how long they have been there may impact how much you increase their rent.
- Utilities – Are they separately metered? What do the current leases say about who is responsible for utilities? You may be able to reduce your expenses by allocating the water (billing back to the tenant). Changes like this can only be made with a written notice and if the tenant is either month to month or on the verge of a lease renewal when the original contract can be amended (i.e., if the current lease states that the landlord is responsible for utilities)
- Landscaping – On multiple duplex’ the tenant may be responsible but on a large complex there may be a landscaping or grounds keeping expense. Check the lease!
Last but not least, you also will want to verify information on the listing like taxes, check to see what current owner pays in insurance (you of course will need to get your own quote later down the line) but these will make sure that you have pretty accurate numbers when you are evaluating a property.
If you have any more questions, feel free to reach out to us at 817-462-0303!