Updated: Jan 9
An essential part of buying a property is touring it. The timing of the tour depends on your proximity to the property and your internal process; I only tour properties after my Letter of Intent (LOI) was accepted and I moved to the best and final round.
Many sponsors tend to focus on the property’s units and exterior condition, and even though it's crucial to look at them when you tour a property, there are 3 key areas that sponsors often overlook, but can be a great source of information about the property. Here they are:
The Seller’s Property Manager
No property tour should be conducted without including the seller’s Property Manager. Property Managers have a wealth of information on the property itself, and while many investors tend to focus on talking with the broker, the Property Manager actually knows the property better than anyone else.
The key to a successful tour with the Property Manager is to engage them and make them an active part of the tour. Make them feel comfortable with you and encourage them to talk candidly about any problems or concerns that they might have. This is how you can gain some valuable information from them about your prospective purchase.
What type of questions should you ask? Remember, you have an audience with the person who has the most knowledge about the property you’re planning to purchase. Ask which amenities are most popular and why they’re important to prospective tenants. Here’s why: if you’re planning to invest money to improve the property, you’ll learn where to put those funds. Ask about ways they think you can cut expenses, because they have an intimate knowledge of the property’s balance sheet.
Ask what is missing in terms of amenities. What would he or she like to add, like reserved parking or in-unit washers and dryers? Finally, ask which amenities are not being used. This information is valuable because you can possibly reposition them. As an example, if the laundry facility isn’t being used, you could turn it into an Amazon locker facility.
Here’s an interesting angle: ask the Property Manager if you gave him or her $150,000, how would they spend that money? This is telling in terms of what the property needs or lacks, and it can be an eye-opener to prospective property buyers.
Tenants are the lifeblood of your investment, and hearing what they have to say about the property is invaluable. These people are representative of the ones you’re going to m