by Theresa Bradley-Banta

You’ve done your research. You’ve selected a solid real estate investment market. And now you’re ready to start taking a hard look at potential multifamily investment properties within your chosen investment market. You may even have some properties in mind.

Where do you go from here?

Here are 5 steps to making an offer on a multifamily property:

1. Review the Listing Brochure

Contact several multifamily brokers who specialize in your chosen investment market.

You may find brokers who push for an exclusive arrangement as your representative, but that loyalty has to be earned. Work with multiple brokers until you find one you trust and work well with.

Review each listing brochure (a.k.a. offering memorandum) and make a note of any questions. There’s no such thing as a stupid question.

A listing brochure will give you pertinent information about the property:

  • Property address
  • Building style
  • Number of units and unit mix (1 bedroom, 2 bedroom, etc.)
  • Current and pro forma financials (rent, other income and expenses)
  • Proposed financing
  • Financial analysis (proposed investment returns)
  • Asking price
  • Sale and rent comparables and other market data
  • Other property highlights the seller and broker consider important

It’s all good information to have. But be aware this is a marketing brochure that’s designed to promote the property and to support the asking price.

It’s equally important to look for what the brochure doesn’t cover.

What’s missing?

For example, if the marketing copy covers the wonderful location and neighborhood but doesn’t mention anything about property improvements, then chances are the property needs work.

Note: If you are working directly with the seller of the property, without a broker to act as an intermediary, be aware that diplomacy will be the key to your success. It’s important to approach negotiations with a win-win attitude.

Your Reputation: When I do a real estate deal my goal is to acquire the property but I also want to be able to leave something on the table for everyone. When everyone is happy, and no one feels as though they’ve just been “taken to the cleaners,” you’ve done a good job as a real estate investor. And your reputation will reflect that.

2. Get a Copy of the Historical Financials

Now it’s time to get a good a look at the property’s current and historical financial performance. Ask for copies of the Profit and Loss Statements (aka annual property operating data, or APOD) for the past two years.

Very few listing brokers in my experience will offer the historical property operating data—but most will make it available to you if you ask for it.

This is part of your due diligence as a smart real estate investor. Always ask for the trailing financials and never accept “No” for an answer.

Also get a copy of the current Rent Roll. See if you can get a copy of past Rent Rolls as well.

3. Complete Your Initial Financial Analysis

If you read my tips on multifamily property deal analysis in the linked article below, you’ll know that I like to do two sets of financial analysis.

I like to look at the current numbers as presented by the listing broker or seller and I like to complete an analysis using the historical operating data for the past year.

It may surprise you to know that these numbers often tell vastly different stories.

It becomes your job to decide where the happy medium is likely to be. If you are new at multifamily property analysis get an experienced mentor to give you a hand.

Bonus articles you don’t want to miss: Tips on Multifamily Property Deal Analysis and 5 Big Multifamily Deal Analysis Mistakes to Avoid.

4. Schedule a Property Tour

If you’re new to multifamily investing, attend as many property tours as possible. Get to know the:

  • Market
  • Neighborhood
  • Building styles
  • Average unit mixes
  • Typical common areas and amenities
  • Natural tenant demographics
  • Local brokers and property managers

Once you’re familiar with your market you can be more selective about the time you spend looking at physical properties.

During a showing you can expect to see the common areas such as entryway, basement, halls, laundry, boiler room etc. I always ask to see the inside of at least some of the rental units too—I don’t care if the unit is occupied or vacant.

Take a good look at the exterior:

  • What kind of cars do the tenants drive?
  • Is the parking lot full during the day? Do the residents have jobs?
  • Does the property show signs of exterior structural damage?
  • How do the grounds look?

Tour the interior of the property:

  • What’s the condition of major building mechanicals like: roof, boiler, HVAC?
  • How do the common areas look? Are they clean? And in good repair?
  • Do you see proper life safety features (exit signs, fire extinguishers, etc.)?
  • Will you need to update the property? New flooring? Windows? Paint?

I have a great list of what to look for on a property tour in my book Invest In Apartment Buildings: Profit Without The Pitfalls. It’s a good investment—you can do a property tour like a pro.

5. Submit Your Offer

It’s time to make an offer to buy.

I can hear you say, “But wait a minute! We haven’t had the inspectors in. And I haven’t seen the tenant leases. Or completed thorough due diligence!”

After an initial offer is made and accepted, the real negotiations have just begun.

With multifamily properties or apartment buildings, most negotiations begin after you are in contract. This is the time you will conduct your:

  • Inspections
  • Due diligence
  • Negotiations of final purchase price, seller credits, and seller financing
  • Lender financing agreements

Take a look at this article: How to Stop Being Afraid of Making Offers on Apartment Buildings.

If you are light on experience, talk with your mentors and broker about arriving at a beginning offer price before making an offer on a multifamily property. Practice as much financial analysis as possible. The more practice you get the easier it will be arrive at an offer price.

For more education, I encourage you to read the linked articles above and to read the related articles below.

Related Articles:

Should You Hire a Commercial Broker When Buying Apartment Buildings?

How To Get Started Investing In Apartment Buildings

The Art of Negotiation: Six Simple Rules


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Theresa Bradley-Banta writes about investing in real estate while avoiding the pitfalls that plague many new investors. She is a 2017 PropTech Top 100 Influencer and winner of 14 American and International real estate awards for her website and real estate investing programs. As featured on: The Equifax Finance Blog, AOL’s Daily Finance, Scotsman Guide, The Best Real Estate Investing Advice Ever Show, Stevie Awards Blog, Rental Housing Journal, and Investors Beat among others.