Paperwork for multi-family analysis

[Debra S.]

I'm in the process of analyzing a 22 unit apartment complex and when I requested from the seller his income/expenses and rent roll, he sent a couple of excel spreadsheets. My question is: are spreadsheets received from the seller appropriate or should I request more formal documentation? This is my first multifam analysis by the way. thanks

[Roy N.]

@Debra S.

Never believe the numbers the Vendor's pro forma.

With a 22-unit building the vendor should be using an accountant. I would ask for the past three years of financials and accompanying tax returns to confirm the numbers reported. Even then, the Vendor could have been manipulating the numbers a little (or a lot) in preparation for a sale.

@Jean Bolger is spot on in recommending Frank's book. If you are going to be hunting mid-sized apartment buildings, you are really buying businesses (not properties) and need to full understand the metrics needed to analyse and value a business.