How do you handle poor financial and rent roll data?

[Brian Stefanelli]

I am looking at a four unit and requested the T12 and current rent roll from the agent. What I received in return were lease agreements from 2016 which are month to month and a document called a "financial statement" which consisted of a list of expenses (oil, sewer/water) That was it!

It's a value add opportunity with one unit vacant (not sure why yet) and needs upgrades in units.  

Do I have my agent press the seller for more financial data and current rent roll?  Is this an opportunity because it's obviously being poorly managed?

Any insight would help.

Thanks!

[Casity Kao]

@Brian Stefanelli  Ask for tax returns, or do a 4506-T.  It is common for small multis that small they are not very good at their accounting.  If they won't provide that at least ask for utility bills, copy of insurance dec page, and rental agreements.  I prefer to ask the seller to evict the tenants if they say they are on a month to month lease but in  a multi offer situation that may not be possible.  Otherwise for a small multi your agent should understand the market enough to know what type of cashflow you can expect.  Otherwise if they provide nothing you have to make assumptions that you feel are reasonable.  I tell the other agents that if the seller can provide better documentation, and eliminate some of the guess work my client will offer more, which is true.