When buying a duplex or any small residential rental unit building, you should always complete what’s called a “Due diligence” check on the property. Every good Real Estate Investor generally has a check list that they use, as part of their normal investment process. Other Investors who use a good quality experienced Real Estate Agent, will have the Agent complete this for them.
Which ever way you chose to complete your “due diligence” on the property, here is a list of important items that should be included.
1. Always review a copy of the Income and Expense Statement from the Seller. Your main concern; is the Seller reporting an accurate picture of the income and are the expenses in line with a property of this size. Watch for a property that has very low expenses, as it indicates a lack of proper maintenance on the property. Check to see if the rents are low or higher than the surrounding neighborhood properties.
2. Ask for any and all service contracts on the property. This would also include any warranties on work completed due diligence check on the property with the past 5 years. In reviewing any service contracts, make sure you can change or renegotiate them. The last thing you want is to be locked into a long term contract that you have no control on.
3. Complete a visual inspection of the building and property itself, both interior and exterior. Many times you can hire a Property Inspection Service to complete a more detailed inspection for you.
4. During the interior inspection, note any repairs that need to be addressed. Check the appliances in the Kitchen. Who do they belong to? Sometimes the tenants they actually own, so verify ownership.
5. If during you interior inspection, you have the opportunity to meet he tenants, ask them to verify their monthly rent and any concerns they may have with the unit itself. They most likely will be more than happy to point out in flaws about the property.