Hey guys, I'm new to investing. Living in CA, I need to invest out of state due to limited funds. For multi-unit properties for sale, if the seller specifies that the units are rented out/occupied, how can this be verified, as well as the rent amount they claim the units are rented for?
Howdy @Rose Torio
This is accomplished during due diligence with an Estoppel certificate (Letter). It is signed by the current tenant(s) confirming the terms of the rental agreement. It includes things like the amount of rent, the amount of security deposit, and the expiration of the agreement. It may also include any claims against the current Landlord (Owner) the tenant may have.
First off, I would request a rent roll and Trailing 12 from the seller. Additionally, many investors request to see the sellers tax forms because that will verify the accuracy of the T12 (unless they are willing to lie to the IRS, then that is a bigger issue). This should be a good start in the process of verifying the financials of an investment.
Thanks John and Rob. When, during the buying process, would be a good time to ask for these items?
I request the rent rolls, T12, and tax return as @Rob Beardsley mentioned when I start doing a more in-depth analysis of the property. The Estoppel certificate is during the due diligence process (after you are under contract). The Seller is not required to provide the information. But, if they want to really sell then they usually will provide them.
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