So many people buy Multifamily Complex’s and just assume that the property will continue to meet the previous owner’s NOI…WRONG!!
For novices this often results in feelings of blame. The novice blames the inspector for missing something, the file audit for missing something, the previous owner for hiding stuff or inflating profit or delaying repair, or putting unqualified people on the property to keep up the Occupancy Percentage. And guess what the Previous Owner probably did all those things!!! Maybe even a little more…
So what do you do? Sue the inspector? Sue the auditor? Sue the previous owner? While that might play through your head, unless there was malicious intent…suing is a waste of time, energy and money.
What you really do is set aside a cash reserve which ideally should be a month of expenses AND a capital reserve to fixed the EXPECTED Deferred Maintenance, ALSO cover removing the unqualified tenets AND set up the “curb appeal” of your property. Expect to spend anywhere from 1 to 3 years on this project.
Remember don’t spend your money wildly or in reaction without a plan. Because if you do the reserve disappears and the problems remain.
But with a plan and some hard work Multifamily Investing is Simple, Enjoyable Business.
Till next time…
The Duperron Group