Scaling To Multi Family Investments in Manitoba - Due Diligence Steps
Acquiring multi family properties in Manitoba comparative to single family or small multi family is quite a bit different. Here’s what the due diligence process should look like when acquiring a multifamily in Manitoba - more specifically, what our process looks like
First, obtain the following:
Rent Status Report: you need to request authorization from the vendor to be able to pull this document from RTB. Once you have the signed authorization submit both the letter of authorization, along with your rent status application at the residential tenancies branch.
Leases: we recommend obtaining all leases and carefully examining them for accuracy. Additionally, this will help you in registered rent due diligence.
Centralized Property Search: your lawyer would complete this process, and its a document that essentially summarizes all of the key components of the building - are there any outstanding caveats? Open permits? Outstanding work orders, etc.
Insurance Estimates: we never recommend basing your numbers on existing insurance premiums or the vendors insurance premiums. Always request updated insurance estimates from your insurance provider or broker.
RMA verification (rent market analysis): complete a thorough RMA to ensure accuracy after doing a complete building tour.
Financial statements (3 years of operating statements): request & review the operating statements, these will tell you in greater detail the pertinent information, rather than depending simply on a proforma.
Follow up by completing a Construction Walkthrough: ensuring you evaluate the building & its integrity, as well as your intentions for renovations.
After a thorough review, if things check out, you’ll need to
Evaluate the Registered rents & complete an overall analysis (after application) - obtain details via RTB.
Obtain a commercial appraisal for the as-is and as-complete value
Depending on size, the lender, and your preference, it’s recommended to obtain an inspection and environmental report.
Lastly, prepare for closing either in cash or apply for financing.
We hope you found value in this blog - again, it’s our preference to do the above, however not every step is required. We suggest carefully considering the lenders requirements, and your own appetite for risk and then determining your own due diligence process. This one is rather all encompassing.
