20 Units financial Due Diligence question ($3m deal)

[Account Closed]

Hi all, 

I am in due diligence state for this deal (seller financing). The seller is an old guy who manages the property himself and does not use any software. He even mixed with personal bank account with all rent deposits. 

In the process of verifying rents, we requested last 1 year cash flow (bank statements). He said he doesn't want to go through trouble of inking all the personal transactions but to provide last 4 months. He said he will provide lease audit & P&L statement YTD. The property has 40% tenants (mtm), 20% very long term (more than 20 years). 

Do you think it is norm and enough to do financial due diligence for this property? If it were bank financing deal, what would bank request? 

Thank you so much in advance. 

[Ronald Rohde]

Yes, you should always do due diligence commensurate with the risk you are taking on the property.

The bank probably wouldn't lend on a deal like this and the Seller knows it. Ask your attorney to review leases, vendor agreements, age of major appliances, budget for capex, cap rate, do you have individual meters?