Due Diligence Docs Before Walkthrough
Before a walkthrough and before signing a contract is it appropriate to ask the seller of a small multi family for:
1. Rent Roll
2. Property Tax Bills
3. Utility Bills (last 12 months) (landlord pays all utilities)
4. Income & Expense Statements (summary)
5. Lease Agreements (Sample or Overview)
6. Recent Maintenance Records (summary)
7. Capital Improvements Summary
Most Popular Reply
I think asking these questions are well within reason. Especially if the seller wants to boast how amazing of a property this is for you to purchase, this would be the time to brag about the rents, how well maintained the property is, how great the tenants are, and so on...
Hopefully the seller has been organized and is able to get this information to you quickly. If they delay or are hesitant to give up some of this info, it could be an indicator that the property isn't as good as they say.
@Daniel M. You can always ask for those items at any time, but it doesn't mean that you'll get them. It's pretty typical to get an income statement and rent roll before a walkthrough and before signing a contract (there's many times that you'll also get a capital improvements summary too), but it's not as typical to get the other items prior to contract execution.
Depending on how small the property is, you might be able to push for more of these items on the front end if you're dealing with a "mom and pop" owner. Most of my experience is with larger multifamily, so there's only so much information you're going to get from the owners of those properties on the front end.
I think asking these questions are well within reason. Especially if the seller wants to boast how amazing of a property this is for you to purchase, this would be the time to brag about the rents, how well maintained the property is, how great the tenants are, and so on...
Hopefully the seller has been organized and is able to get this information to you quickly. If they delay or are hesitant to give up some of this info, it could be an indicator that the property isn't as good as they say.
Yes I would ask for all of those. In my experience most have provided early on but maybe not. Anything they don't provide I'd for sure get and review before due diligence is over
@Daniel M. - I think prior to a walkthrough the seller has little/no relationship with you as a potential buyer, so I wouldn't expect more than a rent roll and a list of expenses. I would be on the lookout for the current condition of the units and building while you're walking through to assess how well it's maintained. If you think you like the opportunity I would then ask for other documents to verify the expenses, including utility bills and Income and Expense statement. After you have an agreed upon price and a contract, I would then ask for the remainder of the documents you reference, but would not be surprised if you don't receive maintenance records of capital improvements. You absolutely need to get copies of all the leases, AND, before closing I definitely suggest you get estoppel agreements signed by the tenants verify their current rent, security deposits, and any other important terms. (I recently bought a quad and found out that two tenants did not have security deposits on file) Good Luck!
Pre-offer, it's reasonable to expect to be able to get a rent roll and answers on any recent improvements. Property taxes are public record and insurance would be specific to you, so you can kill a lot of those questions. Everything else would be up to you to underwrite.
Do you mind sharing? I am curious to see all what you have on there!