Seller doesn't have rent roll
Hey everyone,
Im currently trying to set up a deal with myself and some investors, and the agent im in contact with just told me that the seller "isn't a rent roll type of person"
Im a pretty new investor, so I'm wondering what other ways I could find some sort of evidence of tenancy. I have read bank statements as well as tax reports. If so, how would I go about finding them?
Thanks in advance!
The seller needs to provide that documentation as part of the due diligence documents and your agent should request this. I wouldn't feel good about a deal if the seller can't prove the income unless you feel good about your independent research on the area, etc. I am sure others will weigh in and give more insight to this as well.
"Not a rent roll, type person" = "Not a maintain, their properties person" = "Not a screen their tenants person"
Be prepared for economic and actual vacancy, deferred maintenance, and tenant issues. All of those things are tolerable at the right purchase point.
The seller filed taxes on the property, use those to figure out operating income and compare that to how they're telling you it performs. Have tenants fill out estoppel agreements so rent amount deposit amount and ownership of appliances is documented between tenant seller and buyer. Make it the seller's responsibility to clear up any discrepancy prior to closing.
Is there any way to find how much the property is making in the tax report or bank report? All I found is the assessed value of the property.
Originally posted by @Dustin Drummer:Is there any way to find how much the property is making in the tax report or bank report? All I found is the assessed value of the property.
First thought, sketchy. Not sure if the agent is trying to take advantage of your inexperience or not, who knows. Some good ideas mentioned above here. Even though the agent is saying the seller isnt a rent roll type of person, I would then ask, what type of person is he? Is he a write it on the back of a napkin guy? A only tracks it by deposits in his bank account guy? Where can I see the income on the property and which tenants have/have not been paying and how much? Every deal has a price it makes sense at, you just have to factor in all the variables, what if you buy and all the tenants aren't paying? You then have to evict all of them? Then take care of damages caused from their time in the property and deferred maintenance and general repairs.
Rental income is not public knowledge for you won't find it anywhere online. In terms of your mention of tax report, the seller would need to provide you with the schedule E page of his tax returns so you can see the info. Even then however, that is 2019's taxes and says nothing about how the property performed in 2020 pre covid and throughout covid. Even if you were able to backtrack and find the online rental listings for all of the units, that still doesn't mean that is the rental amount being paid, or if its being paid at all
Geez man it’s not that big of a dea. That’s a good sign your dealing with a rookie landlord . l if you know the numbers and what they should be you would be confident. You guys are so risk adverse that it makes me wonder how you’ll make it in this business
@Dennis Wayne that’s awfully thoughtful of you but I have investors I must comply with, It’s not for me. It’s information for my investors. But thanks!
@Bradley Padula yeah I figured this out, thanks man!