Poor Records

[Chaim Zigelman]

Hi All,

I'm looking at a property but the owner has not kept any records for repairs, expenses, maintenance and so on. All he has to go off of is his rent checks (not even a rent roll!). He is also stating his insurance as $1500 but the quotes I am getting are around $4000!

I did go onsite and the property looks ok but there are things that need to be done. Not repairs wise, mostly maintenance like cleaning painting the hallways, cleaning the stairs, sweeping and so on. 

When I do my calculations, should I go the safe route and assume a 50% expenses for NOI? Or is that foolish since it could be a lot higher since he does not have any records.

[Charlie Fitzgerald]

Personally I would sort out the insurance cost issue first. If I was still okay with the property for,acquisition after that, I would get a full inspection done on it and see what they uncover. You have no way of knowing what's in store for you if you don't and any estimation about NOI/NOE you come up with absent an inspection is simply a SWAG. (scientific wild-*** guess)