I am looking at a few proforma's with my agent and I noticed that they are all missing the repairs and maintenance items. I asked him about this and he said that its not something that is usually included in duplex and triplexes but when we put an offer it will be showed in the sellers disclosure.
The reason I am looking for this now is to see what the actual expenses are for the year so I can make an offer on one of them.
What is the standard procedure for duplexes/triplexes? Is he correct?
He is absolutely not correct. Duplexes and Triplexes are managed much more like single families than multi family / commercial properties so it is not uncommon for an owner to not keep his own records. But that doesn't mean it is uncommon for a PnL to not be provided or asked for if it is not initially provided.
If a seller is reluctant to give you a PnL it may very well be because he doesn't keep any records at all and simply can't provide them to you. If that is the case, there is a couple of things you can do:
1) You can assume a 40-60% expense to income ratio (inclusive of insurance, property management and other non-repair related items) to determine a back of the napkin profitability.
2) After getting a general inspection completed, you can send in your general contractor/handyman with the report to estimate what things may break or require repair in the first 3 years. Assume that all of those things will break / require repair in the first year.
At the end of the day, if you do not have the information you need to feel confident about the deal, don't take it. And if your agent doesn't support you in asking for the data you need to feel confident, find a new agent.
In 25+ years in the business, on a duplex I have never been provided one or provided one. Anything above a 4-unit, in my markets the standard is to provide one but less than that it is not.
Thanks for the responses, guys!
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