Analyzing an apartment complex without past income/expense data

[Leonid Sapronov]

If you were doing analysis on a 30-unit apartment complex and, in response to your request to see the last 2-3 years of income/expense statements, the owner said "well, I didn't do a very good job of keeping track of them", what would you do?

I'm practicing doing due diligence on a multifamily and that's what the seller told me after we spoke on the phone. There were no other major red flags and preliminary research shows the property to be in good condition and cashflowing, but it's kind of hard to verify the seller's claims without some historical data.

Should I just do my analysis using known expenses, plugging in reasonable values for maintenance, capex, etc. and not worry about the actual income/expense history? If anything, this will work to my advantage, since I already know that the calculated NOI is lower than what the seller's pro forma claims.

Just now sure how big of a red flag this lack of recordkeeping is on its own and what else it could imply about how the place was managed.

Appreciate any advice!