Buying first Duplex, confirm rental history?

Question

Hello, I'm in the process of making my first offer on a duplex in WA state (Seattle area). I looked at a duplex today, and saw both units. One tenant I met seemed really concerned that her rent had just been increased by a $100 (on her month to month lease), which brought up a thought - how do I confirm the renters have actually been paying? If it matters, my plan will be to move into one of the units, so this may not even matter. Sorry if this is a common question that has been covered. I'm just starting to read through the forums now. thanks!

William Price · Answer

I would ask the seller to see the tax returns for the duplex. The income should be on schedule E or Form 8825. If they don't want to show you the tax returns, it means they didn't claim all of the income and are cheating the government (which would make me question what else they may not be telling you) or the tenants are not paying.

Good luck!

Michele Fischer · Answer

All of the duplexes we have purchased have been foreclosures and we have not received any proof of rental income, copies of rental agreements, or even deposit dollars.  To me getting the deposit dollars transferred to you is the only show stopper, if you run into trouble getting the info.  Always ask yourself what the worst case scenario would be and how you would handle it.  If they aren't paying what the seller says, it may take a couple months to evict and/or get rent up to market levels.

Ruth Bayang · Answer

Whether your offer is accepted or not, I wanted to acknowledge you, @Roger Wagoner, for taking action :)

Roger Wagoner · Answer

Hi Michele, thanks for the tip. By nature, I tend to be pretty conservative and low risk taking, but that means I lose out on some deals. If I took your approach, I guess at least that way I would know the worst case scenario. Maybe I'll make it a request bu not make the whole deal contingent on receiving rental info.

Roger Wagoner · Answer

Thanks William, I appreciate the response. I'm asking my agent to request one of those documents.

First offer ever on a place, I'm excited! Let's see if I can make my very first offer work... (let me dream)

Roger Wagoner · Answer

Hi Ruth, this was my first offer with this agent. I also get the impression it was her first offer for a multi-family unit. She mentioned needing to write some unique language regarding my requests to get the tax documents (suggested above), but it turns out that is "baked in" to the purchase agreement as it is.

Good thing is, she owns rentals herself and knows what a bad tenant is, I think. She took time to talk to the loan officer on Sunday, to get his opinion on the difficult tenant situation I was worried above, since it would be owner occupied. She ended up suggesting we ask the seller to ask them to move out.

So, at least for now I'm happy with the service I'm getting, and I think she is adding value, but I'll continue to monitor if it continues to take a few days to make offers. Thanks again for your input.

Ruth Bayang · Answer

It takes only a few minutes to write an offer. But might take longer if this is your first with this particular agent. Subsequent offers (since she already has your name and other pertinent info) should be a lot faster.Are you working with an agent who has worked with investors in the past? I have found that agents with previous investor-client experience, or are investors themselves, "get it" and work that much faster for you. Mine is busy too but when I say "offer," it gets done right away.

Roger Wagoner · Answer

Thanks Ruth! I appreciate. Question for you - how long does it normally take to put together an offer? How quickly should I reasonably expect my buyer agent to put together an offer?

E.g., I visited the house on Friday, and emailed some questions and talked to my agent on Saturday and Sunday. She's putting together the offer today. Should I expect same day offers to be made? I don't think this duplex is very hot, so I don't think I'm losing out on anything honestly, but wanted to see what I should expect. She's more experienced and is I'm assuming, busier.

Roger Wagoner · Answer

It's in South Everett. I was hoping to find near Bothell, but I didn't see much listed.

Ruth Bayang · Answer

Very exciting Roger! Where's the duplex? In Bothell?

Buying first Duplex, confirm rental history?

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