Extracted from an interview with Sean Sweeney, this insightful guide goes beyond the typical property evaluation, offering practical considerations based on firsthand experiences. Although the interview itself didn’t make it on the podcast due to technical issues, I’ve compiled detailed notes and added insights from my own experiences to ensure you're armed with the knowledge needed to assess a property firsthand before making a strategic offer.
1. Bring the Right People
Ideally, bring your property management company and a contractor (either the property management company’s general contractor or your general contractor). To find a contractor, ask your broker and property management company for referrals. The purpose is to catch any large maintenance issues upfront before putting the deal under contract.
2. Talk to the Property Manager
Ask the following questions:
- How long have you been at the property?
- What’s today’s occupancy?
- What’s it been like for the past year?
- What’s the lowest occupancy has been since you’ve been here?
- How many people are calling in a week to rent an apartment?
- Does each of your amenities get a lot of use?
- Who lives here? (Students, young professionals, senior citizens, etc.)
- When was the last time you repaired the roofs and parking lot?
- How’s the crime at this property?
- Who’s your biggest competitor?
- Why do people rent here instead of the competition?
- You’ve done a great job here. If I gave you $150,000, besides making sure you were compensated for your work, how would you spend it to fix or improve the community?
- Renovate units
- Dog park
- Better fitness center, pool, etc.
- What did I forget to ask you? What else should I know about the property?
3. Talk to the Residents
Ask the following questions:
- Would you recommend living here to a friend/family? Why or why not?
- Have there been any maintenance problems since you’ve lived here?
- What’s one thing you’d do to improve your experience living here?
4. Tour the Units
When touring the property, make note of the condition of the big-ticket items like:
- Roofs
- Parking lots
- Landscaping
- Exterior conditions
- Signage
Also consider:
- What types of units are in demand in that area?
- How do the property’s units compare to the unit type in demand?
- Are there large, walk-in closets?
- Is there an open concept?
- What is the main highlight/selling point in the units?
5. Study the Surrounding Area
Drive two miles in each direction from the property and make note of the surrounding area.
- If it’s residential, document the home prices. (You can use the Realtor app for this.)
- Find the closest retail center — is it new or old?
- Find the closest Chipotle, McDonald's, and Walmart — how long ago were they built?
6. Visit the Competition
Visit the competition to determine market rents and your subject property’s upside.
- What are the rents for each layout?
- What’s included in the rent?
- Tour two or three units if possible for each community by mentioning you’re unsure if you want a one- or two-bedroom.
About the Author:
Joe Fairless is the co-founder of Ashcroft Capital, a fully integrated multifamily investment firm with more than $2.7 billion in assets under management, and the founder of Best Ever CRE. His podcast, the Best Real Estate Investing Advice Ever Show, is the world's longest-running daily real estate podcast with more than 500,000 monthly downloads.
Disclaimer:
The views and opinions expressed in this blog post are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.