5 Key Questions To Ask During Property Tours
With the launch of our new digital property tour series the team at Apartment Educators thought it would be a good time to discuss WHY you should be attending property tours and what questions to ask. For those reading who have no idea what a property tour is when it comes to Multifamily you should start here, but it is exactly what it sounds like, you go to a Multifamily property and tour the property. Think back to your apartment living days when you would go on a tour with the leasing agent, except now you are going on a tour with the owner and discussing NOI improvement plans. Most people hear the words property tour and immediately associate it with touring the complex with their end goal being to purchase the property. I’m here to tell you about another type of property tour that is arguably more valuable because you get to learn from an experienced operator who knows how to close deals. That’s right I’m talking about property tours from educational groups designed to TEACH you what to look for in properties and give you real world examples of what they did to optimize their property and rent values. Keep in mind most other groups can charge hundreds of dollars for these kinds of tours so PLEASE leverage our free video library and submit your questions to our operators. Now that you know what kind of tour we are talking about let's dive into what questions you should be asking operators.
How did you find the deal?
Knowing how to source a GOOD deal is an essential part of the multifamily investment process. The team at Apartment Educators suggests asking this question because it will give you insight into how others in your market are coming across opportunities. Is there a broker that you need to get introduced to? Do you need to be more aggressive in your outbound LOI strategy? Or what is stopping you from finding deals? The best people to learn from are others who already have properties where you want to operate. Please keep in mind that using their techniques or connections does not guarantee any sort of success but it will get you one step closer to being able to act on a good opportunity. In other words, there is NO substitute for deal due diligence but shortcuts on finding potential opportunities are very helpful.
Why was the deal attractive to you?
One of the wonderful things about Multifamily investing is there is a myriad of ways to make deals work. That means there are plenty of opportunities to learn from others doing deals on what made properties attractive to them. For example at Apartment Educators we tend to look for deals that are value add plays, this allows us to invest in a community and bring rents up to the market rate. This helps create an everyone wins situation, tenets are happy to have units brought up to newer standards, and owners are happy because they can bring rents up to market rates. There are hundreds of potential answers to this question, the most important thing to do is ask it so you can learn! Even if your perspective or goals for a deal are different understanding how other deals work will help you evaluate properties in the future.
What red flags/surprises came up during the closing process and how did you navigate them?
While on a property tour it is extremely easy to take in all the information and have a rose-tinted approach to your next multifamily acquisition. You might see beautiful new buildings, but to get there it took months of work dealing with a building with flood damage, insurance, and construction groups (And that’s just for ONE section of units). Keep in mind the owner still bought the property so this is not to scare you away from multifamily investing but you should get a better understanding of problem solving throughout the process. This is one of our favorite questions because you can get great tips from others' experiences. From better ways to underwrite, tricks to dealing with financing, and more! There is no one person who has gone through every possible issue when it comes to multifamily investing, so continue to learn about what problems others have faced and most importantly how they overcame the issue.
What are you doing to add value and why?
Rent growth is a key piece of most multifamily acquisition strategies so you should be learning the best ways to add value for your tenets. I cannot stress enough how much you can learn from asking others about how they added value to their property. I’ve gotten tips on floor material, outdoor lighting, storage hacks, and more. This very much like our red flag question can lead you down a rabbit hole of follow-up questions because of how many different pieces of advice the person giving the tour might have. The best part is because you are there in person or watching the tour online you can SEE the changes and form an opinion if you would do that on your own property. Again with all advice, the goal is to learn, you don’t need to implement every tip but at least understand what others are doing to expand your tool chest.
I have a similar strategy when it comes to acquisitions can I reach out to you when I’m working on my next deal to connect over coffee?
Feel free to change the wording on this one, but your goal should be to create an environment where you can follow up with this person! Your network is KEY when it comes to multifamily investing, knowing others who have successfully closed on a deal will be an awesome expansion to your network. They could be a future mentor, partner, or both! Always ask to have follow-up conversations, just ensure the conversations are meaningful and don’t have a meeting that is just fluff without action items.
Other Questions?
You can ask countless questions because there is so much to learn in the world of multifamily syndication. (So much in fact we have a few courses on it!) Regardless of how you are learning as long as you are seeking education you are headed in the right direction. Have questions you have always wanted to ask an operator? Submit them to [email protected] and we will ask them on our next digital property tour!
