6 unit Multi Family (No expenses from seller?)

10 Replies

I am looking at an out of state 6 unit multi family unit. The seller (Realtor) tells me there are no previous record of expenses to evaluate. The landlord (potentially me) is responsible for gas, water, sewer and common area electric. How can I evaluate income potential without previous records? Boiler and water heaters are gas. I am calling BS on this. The owner must have gas and electric and water and sewer records? Any advice. Unit is in Ohio, Thanks 

@Rob Hayes if you provide the location perhaps someone with a rental in the area can provide some input.  I would be suspicious of a seller who pays the utilities and doesnt have any record of the cost.

@natesmith when I tried digging and made mention that I needed help understanding how the owner (who purchased it a year ago) wouldn't have his records for water, sewer, gas and common electric  (all the items the owner is responsible for) and without this info I couldn't risk a 350k purchase without being able to evaluate theses items . His response was " reach out to me on the next one you are interested in it"! Not even an attempt to help with this, I am guessing you are right! something fishy with this!!! 

Pass......if you can't access all the data to properly evaluate the building then your making a risky investment.  Unless you have someone with local knowledge or call the utility company and get estimates it's not worth risking 350k.

You cant make deals with people you don't trust.

As other people have noted, you'd have to have feet on the ground who can confirm what the numbers should be. Based on the way that conversation sounds like its headed, you're going to face issues when you try to get access to the units as well. If you really want to make a statement, you could always make a much lower offer based on the lack of verification. But you're still taking the risk of potential cost overruns.  

A mentor of mine once said it's ok to pass deals because there's always easier ways to make money.  

Guys, I think we can surmise that the numbers with all expenses ‘IN” are not to impressive or they would disclose. I also know if I wanted it badly enough I could do what @Austin Fruechting suggested (thank you). But the reality is I dont trust this person on this particular deal after the way this was handled so I will walk on this one. The problem is this person is well known in the markets I am interested in and there is a good chance I will be having to deal with his company for future properties of Interest in the Cleveland market area! Oh well, I hope he will be more forthcoming in the future? 

Guys, I think we can surmise that the numbers with all expenses ‘IN” are not to impressive or they would disclose. I also know if I wanted it badly enough I could do what @Austin Fruechting suggested (thank you). But the reality is I dont trust this person on this particular deal after the way this was handled so I will walk on this one. The problem is this person is well known in the markets I am interested in and there is a good chance I will be having to deal with his company for future properties of Interest in the Cleveland market area! Oh well, I hope he will be more forthcoming in the future? 

Hahaha this is actually ludicrous that this seller expects to have a decent interest in a property without having an accurate representation of the expenses. It's like a Private Equity firm purchasing a portfolio company without looking at the Income Statements!

Sad part is that with all the competition in the Cleveland market, and in REI in general, I am certain this opportunity will sell fairly quickly. Best of luck with your search!