Due Diligence

8 Replies

I recently came across a deal on Redfin for a multifamily and reached out to the agent.  I asked them for

1) Rent rolls and agreements 

2) Historical costs and maintenance expenses 

3) Additional pictures of the property (only one exterior photo was provided) 

The agent wrote back and said that none of these were available and the seller would only tour after a serious offer, but the tenants had lived in the fourplex for 10 years (probably bs). They also did give me the charged rent and it was probably half of what the market is charging now (though with no pictures the place could be a dive)

 Is this a common experience when dealing with Redfin and/or purchasing rental properties? The math at the average rent for the zip and the asking price looked pretty attractive but I am put off by such a closed lip owner.

That is what I figured. The agent who responded on the web said that the seller's agent would not share the details which is strange. I think the deal is too suspicious to continue with but I will try another agent just as an experiment to see what happens.

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@Steve Burt   In my experience to get to the meat on the bones you need get the property under contract and hand over earnest money.  You are then a serious buyer. Many busy agents don't like or have time to be pushing paper for tire kickers. And likewise sellers don't want to be handing over personal info like taxes etc to everyone who drives by and calls the number on the sign. I cant blame either party. There are tons of RE hobbyists out there who love to analyze deals and maybe buy but one a year. Some RE agents will be more proactive than others and many will have the basic deal numbers on their marketing info. If you want to dig deeper you need to prove you have serious intent.

In my case before I ask anyone to jump through hoops I usually make an offer and provide EM. Then my purchase contract stipulates in detail what I need as part of the due diligence (usually a pretty extensive list)   Failure to deliver same and the contract is void and any EM is returned. Usually the realtor with contract in hand will then see it through and provide the info and the seller who sees his/her potential sale and his upcoming pay day are much more likely to accommodate.

@RonanM. That is great advice about the EM. Is your offer subject to change based on what comes out in the DD (i.e. foundation damage, rent rolls seem fake etc)?

That's interesting. I gave a brokor earnest money for a JV property. That was over a month ago. I don't have much information on either the broker on GC/investor who introduced me to the broker. However, we met this past weekend and set to close on the house at the end of the month. Haven't signed a contract yet. I believe they were working to getting the other JV partner and also a credit JV that we'll use as the guarantor when we go to the hard money lenders.

Not sure if this info is helpful but I can understand that behind the scenes work requires skin-in-the-game on the investor's side.

Yes offer is subject to inspection appraisal and the provision of the paperwork and documents I request of the seller regarding income, expenses, leases, Schedule E and all that good stuff.

I don't fluff around with EM amounts like $350 and the like. I usually throw $10K at it for a property I am really interested in. That shows you are not engaged just to waste anyone's time.