Multifamily owners and investors.
If you have purchased multifamily, chances are you’ve looked up the rental license history of a property. If not, it is a good habit to get into (as a note a good multifamily broker provides this service). Whether you are horse trading with your neighbor or working through brokers, one lesson I preach and live by is “don’t assume.” Don’t assume your neighbor is telling you the truth. Don’t assume the broker has all material information in the package. Find the true story/answer out yourself! The basic question you need answer is: Does this property have any open inspection issues or punch list items (or is the rental license or certificate of occupancy all current). Ideally you’d even know the next inspection date, but we’ll get into that later in this blog.
Here in Minnesota, public web accessible data differs greatly from city to city. To no surprise, Minneapolis and St. Paul have drastically different data available online. We’ll take them one at a time in this blog. Sorry Minneapolis, this one St. Paul wins by a landslide.
In Minneapolis, Property Information is a portal into basic information about a property–who holds the rental license, what permits have been pulled, how many units are at the property, etc. What is missing however, is reference to the rental history specifics of the property. The public has no quick access to date of the last inspection, when the next inspection is, what Tier Inspection Schedule the property is (1 yr, 5 yr, 8 yr), or specifics on any Housing Orders at a property. In short, a Buyer has no certainty specific to the license if the property is “a train wreck” or “a clean building.”
After checking with the City, a buyer’s best bet is to call 311 and ask the representative “Are there any “Open Housing Orders?” and “When was the last rental license inspection?” The agent cannot tell you the Tier Schedule or any specifics about any Open Housing Orders, just if there are any open orders or not. At the time of this post, InvestProp awaits further clarification from the City, but it appears specific data will only be released/accessed via a physical visit to the Development Review Office downtown (in person or via kiosk).
St. Paul is a different story all together. St. Paul, like Minneapolis, classifies properties into inspection schedules (1 yr, 3 yr, 5 yr). Other than a Certificate of Occupancy (St. Paul) vs. Rental License (Minneapolis), the material difference is that St. Paul posts the property class online (A, B, C), the last inspection date, the next inspection date, and the list of open inspection items the owner addressed. St. Paul airs all the laundry on all properties–dirty and clean–readily for the public to access and review. All one has to do is visit the One Stop website and punch in a property address…and BINGO!–in a few keystrokes, a buyer can quickly learn the property specifics:
- Have tenants complained about the condition of the property?
- What recent inspection work orders were required and completed?
- What was the most recent inspection issue?
- What is the class (i.e. does the City believe this to be a problem or good property)?
The Take Away:
Online research is only one aspect of investigation prior to purchasing multifamily. That said, when a City provides transparent data online (St. Paul), it can be a powerful tool to within minutes learn if the property is likely trash or treasure.
Did you find this article helpful? If so, please offer your positive comment below, or even better, contact us to see how we can help with your multifamily needs!
Keep plugging away!
–Brad Schaeppi, Founder and CEO