Seller will not provide bank statements in due diligence

[Kyle Mitchell]

Hi everyone,

Has anyone come across the seller not providing bank statements during due diligence?  Is this a red flag or something that is common?  Just looking to see how hard I should be pushing on this issue.

Thanks,

Kyle

[Chris Mason]

Originally posted by @Kyle Mitchell:

@Henri Meli I don't think there's a law that states you have to give anything during due diligence, is there?  So when I ask for copies of leases, contracts, warranties, etc.  Why would they have to give me anything?  

@Chris Mason I am asking so I can confirm that what they say the property is generating in income is what it's actually making.  

 More common ways to validate that:

- Estoppels. 

- Schedule E with SSN and other properties blacked out.

- Talk to the tenants while viewing the property during your inspection period.

- Instead of the full bank statements, ask for transaction summaries... like where you search your account for "$2350" and it shows you all $2350 transactions for the last 12 months. Note that this only shows you when the landlord deposited the check, it won't show you if the tenant did/didn't have their rent in by the 1st, since most landlords deposit all their rent checks on like the 8th or 12th. This would also be unusual, but less unusual. 

I wouldn't hand over bank statements to a buyer, either.