If repairs are needed, what would it cost to repair?
Are there separate utilities for each unit?
Do the tenants pay for their own utilities?
Do you have a list of expenses that are incurred with the building? (trash, utilities, cable, etc…)
You are going to come up with your own numbers too, but it is nice to know what the seller says with these numbers so you can see if there is any discrepancies.
For the 2nd one, calling an agent is not necessarily a bad thing. I have a listing on the market right now, as an agent, that has motivated on it. These folks want to move before school starts if a buyer can be had that quickly. These folks will entertain most offers from the retail buyer for closing costs and/or a price adjustment; but no carrybacks or creative deals as they want their cash to move onward. You won’t know that that ‘motivated’ in the ad means until you call.
After my morning run I was looking over the ads in this morning’s paper as I normally do. I live in a relatively small town and there usually isn’t anything too exciting. This morning, however I ran across several. I tried calling one of them, but had to leave a message instead. I thought that if I’m ever going to get anywhere I need to make phone calls.
I wrote down a few questions to ask…please critique for me.
THe one I called about is a duplex. It says 4/1 and 1/1 $1,025 mo. income. $64k. It’s located in a very desirable area of our town but a specific address wasn’t given. Below are the questions I was going to ask:
Could you tell me about the property?
What is the address?
Why are you selling?
Is it in need of repairs?
Is it currently occupied?
How do I bring up the money issue. THis is just one of the properties. There is also 3/2 house on an acre for 94,900 where it says the owner is motivated; but you have to contact an agent. Will that be a problem?
Have you ever done any repairs to the property that require a building permit, but you did not get a building permit? You have to watch for work that is not up to code, and you may have to redo it at your expense later. Also, you may have to pay the building permit fee, even if the work is to code.
Ask whether the owner has a termite report, a building inspection report, a roof inspection report.
Do not ask for an appraisal report. Always ignore all appraisals offered by sellers.
Start off talking about the building, as an icebreaker. You can ask questions such as you list and as Tim Fierro(WA) lists, but don’t fire them out in machine-gun fashion. Ask a couple of questions then make some self-referencial statments, such as you like the answer, you hope to be able to do the deal, you want the seller to have a good sale to you, etc. Then back to more questions.
Move on into the situation of the seller. Owned how long, owes how much, wants to sell for why? What will do with the sales money? This is leading you toward having the seller carry a loan for you, reducing your expenses and the time to close. Also, often at lower interest rates.
A few more questions about the property:
one building or two? If one building, you may find it better to have a 3 and 2 bedroom, just be reconfiguring. Or maybe 4 and 1 will earn more money. Be aware of how to configure the property for maximum cash flow.
Is one or two stories? Similar to above.
Is it in a designated flood plane?
Does it have city water and sewer? Septic systems can cause expensive problems.
Are there garages?
What is the size of the lot?
What is the immediate neighborhood like? That street? Lots of SFRs? Other rentals? Well kept houses?
Has there been a murder in the building or a death of any kind? How long ago?
How old are the water heaters?
How old is the roof? Does it need replacement?
What condition is the foundation?
Does it have air conditioning? I don’t ask that question here in Oakland, CA, but you’re in TX.
Besides the duplex, does he have any other properties he is considering selling? Sometimes the other properties are a better deal.
Well, there are lots of more questions, but those are the ones I can think of for right now.