Wayne, NJ · Member since 2019 · 31 posts · 11 votes
Hello everyone,
I am new to real estate investing and this may or may not be a basic question, but how do/do you obtain a property’s expense prior to putting in an offer or down payment? Do you ask the broker/seller or do you have to do your own leg work and figure it out yourself? Trying to understand the proper way of doing this.
If you're talking commercial property, then a T12, which will show expenses for the past twelve months, is something you can request from the seller/broker before putting the property under contract. Some won't give you this until you are under contract, which is fine as long as you have the proper due diligence window. You can use a rule of thumb like a 55% expense ratio until you get more information. Plus, their numbers don't really mean anything except to show you how they ran that property. You will still want to underwrite with your own numbers.
If you're talking residential, you don't need their expenses. Instead, come up with your own numbers based on what you know about the property. This can be adjusted during due diligence as you learn more about the property.
If you have other questions or just want to chat, please feel free to message me anytime!