NCND and POF are these common to be asked up front?

Question

So i am helping to sell a large apartment complex in Florida.   The buyer is asking for financial information pertaining to the property (3 years rents, expenses, debts etc)   is i common for the Seller to ask for NCND and POF up front in order to release this information?

Joel Owens · Answer

Hi Gerald,

As I had communicated earlier the single most IMPORTANT item is knowing if you have a deal or not before marketing it.

You can't sell a property to someone unless you know and understand the numbers.

I would challenge the 100% occupied and 17% cap rate. I seriously doubt those numbers.

Do not market properties until you know the true cap rate and how long occupancy has been stable and what tenants were put in there with rent credits and concessions.

People say these high caps and it plays on buyers greed when the buyer should not look with blind eyes but be realistic with the market and analyze the numbers on quality properties.

POF is ( proof of funds). Usually a bank statement with the purchaser name or company where they have a controlling interest valid within the last 30 days.

NCND ( non-circumvent and non-disclosure ) - The sellers want to know WHO the buyer is before releasing private financial data about the property. They do not want this information falling in the wrong hands and the local competition learning information to use against them etc. Also some sellers do not show properties on the market and want to sell but not let anyone local know about it.

The non-circumvent the seller doesn't care about that. You can't really circumvent the seller of the property if they are the true owner........ : )

Now if they just have it under contract etc. that is different than holding title and ownership already.

Likely this is coming from the marketer who doesn't want to be cut out of the deal.

These situations there is usually a daisy chain of people trying to collect a fee that are not licensed to practice real estate and the property is overpriced and trash with bad numbers presented.

People send me stuff all the time asking for POF, NCND first and all of that. I just hit delete on my e-mail right away. Can you imagine every time for clients having to sign all the garbage and get sent overpriced trash all the time?? Also people say things are off market but I find these properties plane as day. The bottom line is 90% of wholesalers have no clue what they are doing and presenting and to expect real players in the market to jump through those hoops to look at junk deals isn't realistic.

Hope it helps.

Joel Owens · Answer

Real easy down and dirty for multifamily in under a minute.

Marketer saying 17 cap and 100% occupied.

Potential buyer: How long has property occupancy been at 100% and not below 80%??

Marketer: 2 months (end for buyer) or 1 year or more ( continue ).

Potential buyer: What are gross rents by unit type and total number and does landlord pay water ?

Marketer: Total Gross Rents are 300,000 a year and total expenses are 25% ( end of call from buyer ) or total expenses are 50% and landlord doesn't pay water ( continue ) or landlord pays water and expenses are 60% ( continue ).

You take total annual gross expected rents from all units and then times .40 if a landlord pays water is your NOI. So in this case at a 10 cap the value would be 1,200,000 before any repairs found to reduce the price further in due diligence.

The marketer can provide this basic information without giving you the location of the property etc. to run a quick analysis without signing a bunch of crap. If the marketer gives push back on your numbers tell them it's YOUR money and you will underwrite the property based on how you want to buy and not how they want to sell it to you and you will not sign anything until it passes your basic test first. If you like the property after running basic numbers to look into for further discovery but it is overpriced get the wholesaler to go back to the seller to reduce the price before you look into it any further. You want to know the seller is motivated or if they are looking for a sucker buyers off of crap numbers.

If the building is totally vacant or 50% occupied and you want to stabilize or tear down for a different adaptive reuse of the land then the valuation model will look different.

Wayne Brooks · Answer

So is the property in Florida or Maryland?

Gerald Harris · Answer

Sorry about that.  it is in Florida.    I had another in Maryland

Gerald Harris · Answer

The owner is looking to sell his complex but not with a broker.   My partner is "Wholesaling" the deal and looking for a buyer.   I understand residential, but commercial is a definately something different.   He asked me to partner with him.   Property is 100% occupied, 17% Cap Rate.    I am marketing to potential buyers from sites like Linkedin and some private groups out there.   My issue is understanding the language and process.   This is an off market property in Maryland

J Scott · Answer

What do you mean that you're "helping" to sell the apartment complex?

Is the seller using a broker?  This is something that a broker would typically discuss with the seller and jointly determine how and when historical property information would be made available.

NCND and POF are these common to be asked up front?

Most Popular Reply