Analyzing Rent Roll Info

3 Replies

I am currently in escrow for my first multifamily and would like some advice for analyzing the rent roll data for the property. In looking at previous posts on the topic some investors were unaware of what the rent rolls are. From my understanding thus far, they provide you with in depth information about each unit's income performance and I'm sure much more. What are some key things I should be looking for in the rent rolls to determine if this property is in good shape for purchase?

One of the biggest things is checking bank statements to ensure that the owner is actually collecting rents rather than relying on per forma data.  This has saved quite a bit of others on the forums from future headaches.  Other than that, I would want to check for periods of vacancies and ensure that the rents collected are consistent with what is being reported. 

@Frankie Woods thanks! I like the idea of not just relying on the data but cross referencing with seller's bank info ha!

Danielle, 

1. Verify the data with bank statements (or tax returns) and that no "outside deals" are being struck. 

- For instance, you can be collecting in the lease $1,200 / month, but the landlord could verbally agree to $1,000 if the tenant does self repairs on the home or snow shoveling.

2. Verify what expenses the landlord is and is not paying. Sometimes the face value rent is reduced by utilities that are being paid for by Landlord (heating oil, gas, water, landscaping, etc). 

3. Be sure to verify the security deposits that were collected. You may inherit bad tenants who were once great tenants that did not pay a security deposit.

4. Read the leases front to back and make sure nothing glaring can harm you or your investment.

5. I always try to speak to the tenants if possible when buying properties that include tenants (you can learn a lot from the people who are living there currently).

Good luck!

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