Posted by BOB(CO) on December 19, 2002 at 10:55:55:
Ask to see the tax returns for the last three years.These are a wealth of information. They will show income, depreciation, and expenses.The commercial banks will require the tax returns anyway so get them early before wasting time going to the bank.If the existing owners did not report all the income, the banks will only take the reported income.Good luck!
Verifying Rental Incomes for sale of property - Posted by Travis
Posted by Travis on December 18, 2002 at 20:48:10:
Im lookin at purchasing a small 4 unit apt building.
The previous owner never gave recipts to his tenants when rents were paid. The tenants have been notified that the rents will increase starting Jan 1st. All tenants have agreed to stay and incure the increase. All tenants have been longterm and are on a month to month lease (No lease). The quality of tenants “seem” good. How do I verify the rent roll? What is the proper way to tell if rents are what they are without current leases in place?
It is ok to have the current owner have all his tenants sign a “rent increase” statement?? Will banks need to see this information as well? I am new to the multifamily real estate move…
All advice is welcome!!
Re: Verifying Rental Incomes for sale of property - Posted by david435
Posted by david435 on December 21, 2002 at 19:42:03:
…How do I verify the rent roll? What is the proper way to tell if rents are what they are without current leases in place?..
I suggest you get estoppel statements signed by each tenant verifying the rent per month, for the last 12 months, lack of lease, lack of claims against landlord, amount of security deposit, if any, etc.
I would also check the local court index to see if this landlord has filed any unlawful detainer actions against anyone in the building you are considering. Also run a check on the landlord’s name to see if anyone has sued him recently and, if so, for what.
Finally, while looking at tax returns is better than nothing, they can be misleading especially if the landlord is accepting rent in cash, gives no receipts and/or has other income property.