I am curious when buying Multifamily along with Rent Rolls and Expenses provided by the owner's property management firm should you also require tax returns for the property. I am finding that many sellers do not what to provide them.
No, the asset's tax filing is not really relevant to you. Important things are the T12 income/expense, rent roll, property tax assessment, etc.
Hi @Jeff Quinlan , We do require the tax returns, but only the tax return information that pertains to that particular asset. Most commercial properties (multifamily, office, retail, etc) we see has the asset held in it's own entity (normally an LLC), so the tax returns usually aren't an issue to get. The difficulty comes with some of the smaller deals where they show the asset on their personal schedule E's or the hold multiple assets in one LLC. It's a little more murky then. We've found that if the reported numbers are correct, they usually are happy to at least cough up a redacted version of the returns. I hope that helps. Good luck to you!
I don't see much of a big deal with requesting the tax return or the part of the tax return that shows the rental portion.
Seeing the numbers on the return shouldn't provide you any further re-assurance.
You should do your own due-diligence.
The seller may not have many any repairs/improvements and in which case the building may be in bad shape and you, the buyer, would have larger expenses going forward.
The figures on the tax return may be inflated/deflated.