Due Diligence - Rent Revenue Discrepancy and Negotiating

[Trevor Harnett]

Hi everyone, I'm in the process of buying a multifamily property and something has come up in my due diligence that I wanted to run by the community. The realtor provided me a rent roll of the current tenants and the last 2 years tax returns (2019 and 2020) for the property. The tax returns only report 61% of the rent revenue shown on the marketing materials and rent roll. I assume the current landlord is pocketing a lot of cash but there is no way to validate. I'm still waiting on bank statements to see if I can uncover anything more. In the meantime, I would like to get some feedback on my next steps from someone who has navigated this scenario before. For instance, do I negotiate the purchase price to support the IRS reported revenue and income? Do I go door to door and validate the rent and payment method? Other ideas?

Thanks for any input, it's much appreciated.