My parents own a small new multifamily build (2009 or so) in a rural town. Dad got a good deal on it back in 2011.
Insurance costs are high (fair plan now).
* Any maintenance is crazy expensive
* Expect to pay double/triple for exterior painting/re-roofing
* If there is an extra heavy snow then you have to pay a local crew thousands to clear the roof. I guess this is pretty much a design flaw.
I had assumed this property would stay in the family forever. But the high costs make it a questionable investment even after it's paid off.
We liked the idea of providing housing for locals (the current occupants of all units).
But the only practical way to get a reasonable return (considering the value of the place) is to convert to short term rentals.
Right off the top you are looking at spending one over months gross rent on each of these:
* Insurance
* Property Tax
* Misc Maintenance (each year)
Once overhead exceeds half of gross rent the business model might well be shot. And there is still a mortgage on the place too.
If you converted one unit to short term then the owner would have some access each year to the building. So that would be a plus.
Are short term rentals regulated in this area?
Anyhow.
Ask for rent histories and estoppels.
Renovation costs, if you turn over the tenants, might negate reasonable returns for another decade.
You don't have a guarantee that rent control won't sneak in and reduce future returns. The only defence to that ambiguity is to raise rents ASAP.