If you are in the process of buying a multi-family commercial property in the state of Florida there are several due diligence steps that you need to perform prior to finalizing your deal.
A Fort Lauderdale commercial real estate attorney can advise you on these particular due diligence areas and ensure that you enter into your deal with full awareness. Your attorney will catch major pitfalls that can affect your future profits, and some of the steps you need to take when considering a multi-family commercial property purchase are described below.
Be sure to catch any units that are in need of repair
You should be aware of any units that cannot be rented right away because of a need for repair. The price for your property should be discounted accordingly. Your attorney can adjust the contract to reduce the price based on “non-rentable units,” and this can be a significant difference in price. Considering the fact that you’ll have to spend money on repairs once you buy the property, this is not a step that you will want to overlook.
Review police reports for the property
You need to check police reports for the property over the last few years to try to determine if it has been a spot for crime or drug activity. Properties that have had even a small amount of crime can be difficult to rent or may not be in line with your requirements. Your attorney can help you obtain police records of the property and help you research the area to determine if it will meet your investment goals.
Check the market for potential growth
You’ll want to talk to other investors and your attorney about the local market that you are investing in. Is demand for rentals expected to grow over the next few years, and will you be able to raise rents?
Look at how rent prices have changed for other multi-family commercial properties in the area along with your property of interest. If your goal is to increase your rent after a period of time make sure that you are investing in a high growth area. Don’t neglect to get a current rent roll before you close the deal so that you know the expected income for your investment in the short term.
Mark Schecter is an experienced Fort Lauderdale commercial real estate attorney who can catch any last minute issues or pitfalls with your next commercial real estate investment. Contact Mark Schecter today for advice if you are considering purchasing a multi-family property in Florida.