Multifamily...Hardly Any Documentation, No Leases.. Deal Breaker?

[Tariq B.]

Hello All,

I have an 11 unit under contract. I will admit this is new territory to me, only dealt with SFR in the past. But it's time to step up my game!

This place needs a make over, owner has left it to deteriorate. It is fully rented and in the rent roll provided it seems like they are staying tenants are paying close to average rent for the area, but I just can't see that being possible with the the shape of the place.  

I have requested copies of all leases, last 3 water bills and copy of insurance (just to get an idea of what the rate would be for the place). However it would appear getting that documentation is going to be tough. This is an older lady who is selling due to health reasons and seems to have no preparation for the sale at all and has no documentation, I feel like this is a red flag or it could just be she is too old to keep track I'm not sure.

So my question is, would getting no up front documentation during the DD period be a deal breaker for you?

Thanks!

T

[Mike Dymski]

Yes, it's deal breaker for most people; so, it's a potential gold mine for you and other savvy investors.  It should not be too hard to create your own P&L for 11 units.  Regarding rents, maybe you can put your hands on bank statements showing monthly deposits or look into getting estoppel certificates from the residents.  I have not had to go the estoppel route; so, maybe others can chime in on it.