In today’s Syndication School episode, Theo Hicks shares a make ready checklist to help you with your next apartment deal and provides you with the checklist by clicking here.
Click Impress Your Investors and Close Deals for more info on groundbreaker.co
To listen to other Syndication School series about the “How To’s” of apartment syndications and to download your FREE document, visit SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.
TRANSCRIPTION
Joe Fairless: There needed to be a resource on apartment syndication that not only talked about each aspect of the syndication process, but how to actually do each of the things, and go into it in detail… And we thought “Hey, why not make it free, too?” That’s why we launched Syndication School.
Theo Hicks will go through a particular aspect of apartment syndication on today’s episode, and get into the details of how to do that particular thing. Enjoy this episode, and for more on apartment syndication and how to do things, go to apartmentsyndication.com, or to learn more about the Apartment Syndication School, go to syndicationschool.com, so you can listen to all the previous episodes.
Theo Hicks: Hello, Best Ever listeners and welcome back to another episode of The Syndication School series, a free resource focused on the “How To’s” of apartment syndication. As always, I’m your host, Theo Hicks.
Each week, we air a Syndication School episode that focuses on a specific aspect of the apartment syndication investment strategy. And for a lot of these episodes, especially the first batch of episodes, included free documents. These are free PowerPoint templates, PDF, “How To” guides, Excel calculator templates, things that help you along your apartment syndication journey. So make sure you check out those past episodes as well as all those free documents at http://syndicationschool.com/. And today is going to be another one of those days where we give away a free document. We haven’t given away a free document in a while, so the document that will be given away for this episode, which you can find in the show notes, is going to be a make-ready checklist. So nothing too fancy or too groundbreaking, but at the end of the day, when it comes to operating apartments or really any real estate in general, it’s kind of details that count.
And one of the expenses that you will have are the turn to make-ready costs. So whenever a unit goes vacant, generally, you will inspect the unit to determine any damages that were caused so that you can not only address those damages, but also reduce the previous tenants security deposit by whatever amount is necessary. So it could potentially result in increased expenses in two ways.
One, you’re not being compensated for damages that the residents did above the normal wear and tear. And at the same time, you might have a poor reputation in the market if someone moves into the units and the washer and dryer doesn’t work, and there’s still nails hanging in the walls. So what you’re going to want to do – this is either going to be you or your management company – you’re going to want to have a walkthrough of the unit once someone has moved out, so you know exactly what you need to do in order to get the property ready for the next resident… And so that the management company or you aren’t doing the inspection from memory, you want to have some sort of checklist prepared. And the checklist that we have available for you today for free is going to fit that need.
So I’m going to quickly go over the checklist and how to use it, but I’m not going to go over every single item that you’re going to want to check; all that is in the document. But essentially, what you want to do is you start on the outside and then you make your way in to the units. And every single room, you want to check really every single thing in that room. So four different things you could check for each item in the room; it’ll be completed, which means that, “Hey, I looked at that item.” And then the other option would be replaced. And so let’s say you look at the item and it needs to be replaced; maybe it’s completely missing, the tenant stole it, or it’s damaged beyond repair. So you check, “Okay, well, this is something that we need to replace.” Or the other option might be that, “Okay, well, it’s damaged, but I think it can be salvageable. I think it’s something that can be simply repaired and then it’ll be good to go.” So you can check “repair”. And that is going to be non-applicable, because not every single unit is going to have the same things in it. But every single room is going to have the same things in it. And so if it’s not there, you can check an A. So you do this for every single item in the house.
And so the categories we have in here are the mechanical, and so you’re going to want to inspect the furnace, the air conditioner and the water heater to make sure that they are functioning and that there is no damage to any of these.
Depending on the type of apartment, there might not be individual water heaters or individual air conditioners or individual furnaces. If you’re one of those large skyscrapers, mid-rise complexes, it’s likely that they’re shared, and so you won’t have to do that for those. But at the very least you want to make sure that it’s working in the unit.
Next is the laundry. And so if there are washer and dryers, you’re obviously going to want to check those. If there’s not washer and dryers, you’re going to check the connections and make sure that all the different nuts and bolts are operating properly; there aren’t any leaks or any issues.
And then now that you’re inside the house for all these rooms, you’re going to also want to check the same things in each room. So the light fixtures, the light bulbs, the light switches, the electrical outlets, the HVAC registers, the walls, the ceilings and the baseboard. So again, this is super detailed.
Again, you want this to be very detailed, because you want to provide a high-quality product to residents. And you might not think that a nick on a door or a nail on the wall or a damaged floorboard might not be that big of a deal to you, but it’s the little things that make your units pop, that make the units high quality. And typically, people aren’t going to do reviews when things are great, but they’re going to be reviews when things are bad.
So I guess that’s something else too that I didn’t mention in the beginning, which is that this could also result in the reduction of reputation and poor reviews for your property if they move in and things are damaged. Actually, I think I might have mentioned that. So again, the laundromat might not be in the unit, [unintelligible [00:09:17].28] So if that’s the case, you don’t want to look at that.
Next would be the entrance. So you would inspect the outer aspect of the entry and the inner aspect of the entry to make sure everything is working and nothing is broken or missing. And then you’re going to enter into the living room and check everything. So once you enter into these rooms, new things would be things relating to the windows – do they open? Are there blinds there? Are there screens there? Then also take a look at all of the smoke alarms and CO2 detectors. Make sure those are functioning properly.
Then you want to check out the patios or the balconies if those exist again, just making sure everything works properly.
The kitchens and the bathrooms are where you’re going to be spending most of your timem just because there’s the most moving parts in there. When you go to the kitchen, what you’re expecting is every single thing that the resident might use. And so you don’t want to just look at everything and say, “Okay, everything looks good.” You want to test everything as well when it comes to the kitchen. So you want to test to make sure that the oven works and that the various settings of the oven works, broil and bake; that the actual range elements work. There should be a hood in the hood filters, so make sure the hood actually works. Same thing with the fridge. Is the fridge on? Do the temperatures work? Is the ice maker working? Does the sink work? Are there any leaks in the sink? Is the sink actually draining? Does the garbage disposal work?
Same with dishwashers. Is the dishwasher working? Is the microwave working? And you want to check every single cabinet to make sure that there’s no damage to those cabinets. That’s a big one, because the cabinet might look good on the outside, but you might pull open a door and lo and behold, one of the hinges isn’t connected properly and the door falls off, right? That going to be the first thing a new resident experiences when they move into your unit, is they open up a cabinet door and the cabinet door falls off on top of their head.
And then next is the dining room. Pretty simple things in there, nothing too fancy. Essentially, the exact same as the living room. The bedrooms – again, still nothing fancy. The only main difference here would be to make sure that the doors actually lock from the outside; or I guess they lock from the inside, but you can’t enter from the outside… And that the closet isn’t damaged. So the closet is going to be a high traffic area, just like the entryway, just like the kitchen cabinets. So the high traffic areas might take a little bit more time to inspect. But in the closet, make sure that any of the racking or the rods are secure and they’re actually there and they’re not damaged. Make sure that the doors open and close properly and that they’re not damaged. So you’re going to do this for each of the bedrooms.
So right now we’ve got it set up for two bedrooms, but you could very easily just copy and paste and add a third or a fourth bedroom, or you can remove one of the bedrooms if it’s only a single unit; or if it’s a studio unit, I guess you can technically remove both bedrooms.
Now besides the kitchen, the next pretty intensive spot would be the bathrooms, because there’s a lot of different things you want to check. So again, you don’t want to just walk into the bathroom and look and then say, “All right, I think it looks good.” You want to check to make sure that the toilet works, flushes properly, refills up. Make sure that the shower head turns on, the top faucet turns on. Make sure that everything’s draining properly. In the shower, you want to check to make sure that none of the tile is damaged or molded or has any water damage. I’m not sure exactly how to pronounce them, but it’s called escutcheons. It’s the ring that’s connected to the wall for the shower head and for the tub. A lots of times, those are no longer connected and they’re kind of just sitting up there. If you touch them, they fall off. So you want to make sure you check all of those. Again, something small, but it’s something that’s going to be annoying to a resident and they move in there and their escutcheons, or however you pronounce it, is damaged.
Same thing with the sink. Does the sink turn on? Does the hot water work? Does the cold water work? I guess that applies to the shower or tub as well. But make sure everything’s draining properly, that there aren’t any leaks in the P-Trap at the bottom. Make sure there isn’t any damage to the vanity. Make sure all the cabinet doors work properly. If there’s a missing cabinet mirror, make sure that’s not scratched or anything. And then again, the standard things from there.
So we’ve got two bathrooms that you can inspect using this make-ready checklist. If there’s more than two bathrooms, again, make sure you add. If there’s less than two bathrooms, you can subtract one of them.
So what you’re going to do after you’ve gone through this entire checklist, you can then have a quick handy guide to know, “Do I need to just clean and then we’re good to go, or is there something else that I need to repair or something else that I need to replace before this unit is ready to be rented again?” And then you can give it to your maintenance person or whatever your process is going to be, they can address everything and then the unit is ready to be rented again.
So again, this is the make-ready checklist. You can get that for free at http://syndicationschool.com/ or in the show notes of this episode. So that’s all I have, a short one, short and sweet, but again, super-important to making sure that your unit is very high quality, everything works, everything looks good, so when that new resident comes in, their first impression is, “Wow, this is a very clean and slick, functioning apartment. I’m going to stay here forever,” versus, “Oh, my escutcheons just fell off my showerhead.” I will figure out one day how to pronounce that word, I promise.
Alright, so thank you for tuning in, as always. Besides this episode, make sure you check out some of our other syndication school episodes on the “How To’s” of apartment syndications. Download this free document, download the other free documents that we have and have a best ever day and we’ll talk to you tomorrow.
Website disclaimer
This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.
The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.
No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.
Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.
Oral Disclaimer
The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.
