How to analyze a multi-family deal before due diligence

[Brian C.]

I recently visited a 10 unit multi-family property with a broker and liked the property. In most circumstances, I request the rent roll and last 2years of financials, so I can run an analysis on the current actuals, to calculate the market value as is, and compare it to my own upside ProForma. However, in this case, I received a rent roll and some handwritten (more like scribble) expenses which contained the actual utilities paid each month and insurance. I asked the broker again to request the financials, however he said the original owner, of 40 years, doesn't have financials readily available and I would need to rely on the available info until we make an offer and entered the due diligence period. The broker's advice was to use the rent roll, a 3%-5% vacancy factor (class A area in SoCal), calculate property taxes based on the asking price, use the actual insurance and utilities, include $500-$700 per unit for R&M, $200 per unit for replacement reserves and a management fee if we needed a 3rd part PM. Does it make sense to use these amounts when calculating the value of the property and my offer price? I usually use actuals, not a mix of actuals and my own estimates. What if the owner just raised the rents used on the rent roll? Does it make sense for me to include 12 months of rent based on the rent roll? What if there's a ton of R&M or other costs I'm not aware of? Is this a common situation and should I just make an offer using my best guess until we get under contract and into due diligence? I appreciate the help!