If you’re in the process of buying a multi-family property, there are several due diligence steps that you should take prior to finalizing your purchase. The time and effort that you spend on due diligence will be well worth it, because you can end up saving a substantial amount of money if you catch a significant problem with the property.
It’s also beneficial to have a South Florida commercial real estate attorney with you during the process so that you can get advice on what to look out for and avoid the most costly mistakes.
Get a current rent roll
Before you make a purchase, be sure that you get a current rent roll for the property. The rent roll will show you the current rent being paid by each resident in the unit, and it will help you analyze the current and potential expected income from the property. In many cases you will need to ask the owner for the rent roll, as he or she will often not include it with their property summary unless you specifically ask for it.
Be sure that there are discounts for units in need of repair
If there are any units that are in need of repair before you buy the property, you should try to negotiate a discount for your costs and time. You’ll have to spend money to repair those units, and each unit in need of repair represents lost income for you. Be sure that you go through every unit on the property and catch any that need repairs, as this is one of your most important due diligence steps. It helps to bring a repair expert along with you i you don’t have experience.
Review police reports
Another important due diligence step is to review police reports for the last few years for the property and neighboring properties. This is especially important if the property happens to be in an area known for crime or a low income area. You may not want to purchase a property if there have been several drug or violent crimes in the neighborhood or on the property. Crime can bring down the property values in the area over time, and it can also make it difficult to rent your units out.
Having an experienced South Florida commercial real estate attorney available for advice during the process of buying commercial real estate will save you both time and money. For more information about the most important due diligence steps to take, call Mark Schecter at (954)-779-7009.