Houston/General- Multi-Family Strategy To Put Under Contract or Not

[Kevin Wood]

My partner and I invest in the Houston area. Currently we are looking at 5-30 unit multi families. We got brought a deal that seemed to be priced at a 9% cap. We assumed with the fudgey numbers we were most likely looking at a 7.5-8%. Yesterday we were 3 hours from making an offer when we got the accounting books. They were in rough shape and were missing a dramatic amount of costs. The new value of the property at an 8 cap was roughly 35-40k less than the initial offer we planned on making (479k). Is this common? How do you approach this problem? I've heard/read that some folks will get a property under contract and then negotiate down, others will just make an offer with what they would pay. Our earnest money was $479 per the contract what amount do you use? Will you sign a contract prior to seeing financials? This seems to be a little more straightforward in SFR so wanted some opinions.