1st park purchased but can’t provide certified rent roll????

Question

Bill F. · Answer

@Adam Philpot welcome to the world of MHP DD.

For a park this size you won't get certified anything; if the taxes were prepared by a CPA I'd take that as a win. This isn't that big of a deal.  After all, a rent roll is just a spreadsheet with names, dates, rental amount, and some other misc info; just a starting point for your detective work.

Like @Gulliver R. said, get bank statements for at least 12-18 months and see what amounts are deposited at what time. You'll want either Schedule C,E,or F (those are the forms that a business owner could use to report rental income depending on their structure.) to double check the numbers match up.

-Are half the rents always late? That's a sign of weak management.

-Did 14 of the 33 units start paying 4-6 months ago? Seller is stuffing tenants to juice the numbers.

-Do the amounts in the bank accounts not match the estoppel agreements? Someone may have tried to get a break on rent or the seller may have a handshake agreement that no one knows about or people are paying in cash.

What does the month by month rent roll look like once you've recreated it? Does it have high turnover, constant late payments, nice and stable?

@Brandon Cravens, the tax records he is looking for are the ones the seller submitted to the IRS, not the local property tax records.

Gulliver R. · Answer

ask for last 3 years bank statements, signed estoppel statements, and/or a signed purchase agreement that explicitly indicates the gross and/or net income of the park is true and accurate.

Gulliver R. · Answer

plus I would have boots on the ground or you go to the park and actually count all the occupied homes, count all the seamingly vacant homes, and then add up the rent to see if that is what matches up with what the seller is saying to you.

Account Closed · Answer

Hello Adam.  @Adam Philpot

I'm a park owner in Indiana and no rent roll isn't a big deal. If you had one it may not be very accurate. Taxes are irrelevant too, as many of these owners operate their business as all cash.

Send me a message if you would like some help getting a handle on your numbers, I'll help you with ways to get the basic foundation of your business in order.

Regards,

Nicki.

Bjorn Ahlblad · Answer

@Adam Philpot You are doing the right thing to dig your heels in. Without proper financials or there is no basis for valuing the sales price, the whole reason for an inspection period is to uncover uncertainties. They will have to come around sooner or later Mom and Pop or not, or buy it as is.

Rachel H. · Answer

@Adam Philpot If they can't provide a rent roll, just request their tax returns from the past few years. There should be a place where they report income there from the park. If they can't even provide that, they may be trying to hide something. Good luck!!

Bjorn Ahlblad · Answer

All the best on your first. I don't know what you mean by 'won' where are you in the transaction? Can you make the offer subject to inspection-including financials; or is it too late for that?

1st park purchased but can’t provide certified rent roll????

Most Popular Reply