Analyzing a 28 Unit Multifamily Deal

[Jim Breedlove]

I'm looking at a 28 unit multifamily deal in Texas and have a question about validating the owner's numbers. The owner provided a one page income statement for each of the last three years. In order to verify his numbers, I'm planning to ask for copies of bank statements and tax returns. Is it standard practice to request this type of information? What other types of documentation should I request?

[Sean Pincus]

Ask for as much as you possibly can. The worst thing they can say is "no". 

I never use what a landlord provides when analyzing a deal, because most of the time the rent is inflated and the expenses are downplayed. Do your own due diligence and assumption of rent roll / expenses

The one thing I would definitely suggest you ask for is a copy of the current leases. The reason you want this is because sometimes there are "back-handed" deals that you can't see by looking at expenses and income statements. For example: 'if tenant shovels driveway, rent is reduce by "x"', or "utilities are paid by Landlord". You'll want to know what obligations you'll be taking on. 

Good luck

- Sean