Considereing a property but they dont want to release tenant info

[Jordan Thompson]

I am contemplating a 10 unit apartment complex but the seller does not want to give out tenant information.  Is this common?

We had a terrible experience with inheriting tenants. So we made it a point to make sure the property is being occupied by the right tenants before negotiating. 

I have also heard horror stories of owners getting 100% occupancy so it will be more marketable regardless of tenants history.

Should I request this information and walk away if I don't get it?

-Jordan

[William Hochstedler]

@Jordan Thompson

In this business, the first priority is to remove the property from the market.  In other words get it under contract so no one else can come in and buy it from under you while you are doing your due diligence.

If you are buying this type of asset you should already have a good idea of market rents and maintenance for the age and general condition of the building.  Base your offer on this.  The seller's rents and vacancy rate shouldn't matter to you because the seller won't be managing the property for you when you own it.  Performance will be based on your management skills and the current market, not the seller's historical performance.

Once, under contract, you will want to spend time and money looking at everything from zoning compliance, utilities, seller's tax returns, building lifecycle issues, etc.  Current rents are just one consideration of many.   Also, unlike commercial, residential leases are typically only a year long so you won't be stuck with bad leases very long.  This could have less of an impact on long-term performance than something like ten 40 year old furnaces.

Moreover, with self-managed properties, the seller's financials are usually not very good and shouldn't be trusted anyway.

Get it under contract and decide after--when a fine-tooth comb is expected.

To be fair, the listing agent should have prepared at least a rent roll when taking the listing.