Over the weekend, I took a few investors out to have a look at an eight plex in central downtown Hamilton so I thought I would share with my readers what to look for when walking through a multi family.
The immediate vincinity – I always drive by the property to get my initial impression because that’s how many potential tenants will first come across your property. I’m always scanning the condition of the neighbourhood, the buildings, types of businesses (e.g. is it near a Starbucks or several pay day loan companies? Think what you might about Starbucks but do you think they’ll place a store in a low income neighbourhood? Who will afford the $8 Soy-chai-moccha-lattes Xtra hot).
Parking – clients (aka tenants) sometimes have cars or have guests who have cars so where will they park when they come to view a vancy or when they invite friends and family over?
Property Manager (PM) – on this day, the property manager was kind enough to take the time to walk us through the property and answer our millions of questions. One investor was late so I took the time to get to know Ken the PM. Not only was I looking to build a relationship but to gain an understanding of the quality of property management. If you’re going to hire a PM, keep in mind they represent YOU so ask yourself if you are comfortable with them handling the day to day client relationships, show vacancies. Ken the PM is personable, experienced, willing to stay on as the PM, knew the building and tenants very well. Plus the vendor had only good things to say about him. Don’t forget to ask the PM what they charge and if there is a superintendant, what they charge and what their job entails. Sometimes the super is a tenant or a neighbour who’s job is to vacuum/clean the common areas, small paint jobs, take out the trask, collect rent. Ask if there are any upcoming major maintenance items or work orders. You need to know for budgeting purposes!
The property itself (Finally!) – scan the foundation, is it concrete block, poured concrete, log? (yes log, they did that back when man invented fire, I should know, I own one, don’t ask why)
Scan the brick work, I’m looking for places where the mortar has fallen out and/or bricks have shifted. Is it solid brick or brick vaneer? Condition of the gardens, windows, sidewalk, lighting, curb appeal etc… if your property is ugly expect to attract less than ideal tenants. Keep in mind, where one lives is an external reflection of oneself.
Common areas – mailboxes, security, what stops uninvited guests from entering the building? Is it clean? how does it smell? the quality of the door handles, hand rails and locks? I give them all a firm shake to test. First impressions? These are all the things going through the mind of your potential clients.
Windows – how recently were they replaced if ever? Mold? How have they been maintained? Windows are expensive to replace so check them out. If its a basement window and its meant to be a fire exit, is it legal? How quickly/easily could someone remove it and exit the building in case of fire. What’s the window ledge made out of? Concrete slab is ideal as it will last forever vs bricks laid sideways as the elements will eventually wear on the mortar. Window sills are exposed to the elements and snow/ice tends to form on them so they take a beating.
Kitchens and Bathrooms – have they been updated? Does anything look like it needs replacing? Dishwasher? I’m a big fan of dishwashers. Look at the quality of workmanship of the cabinetry, I always look at the cupboard doors to see if they are perfectly aligned and sometimes check if they open/close property. The kitchen and the master bathroom are important parts of an investment property as they are very expensive to and time consuming to renovate. I should know, my wife owns a kitchen and bath reno company.
Master Bedroom – is there a closet? Can the room fit a double sized bed because I want to know if a couple can occupy the apartment because two incomes is better than one.
Utilities – separate meters is a big plus, make the tenants accountable for their own hydro. Condition and age of the boiler? How often has it been maintenanced? On this day, we asked quite a few questions about the boiler because they can be expensive to replace. Budget much more money for property inspections for multifamily than you would a single family home.
Roof – age, condition, life expectancy, flat, peaked? Flat tar roofs are probably the most expensive to replace.
Hope that helps! That’s everything that comes to mind at the moment so if you have any other items you look out for please add them to the reply section below or else I will assume I got everything perfect 😉
Till next time, Happy Investing!
Erwin
