Seller refuses to turn over financials

[Nathan Ramirez]

I’m under contract on a 7 unit apartment complex and seller will not provide leases or any form of financial documentation validating the property’s monthly cash flow. His agent says the seller is willing to meet with me in person to show me his documents and answer any of my questions with respect to the property’s performance but won’t actually give any documents to my realtors because “he doesn’t want his business out there”. My agent suggested an NDA to give him some peace of mind but he still refuses. Is this normal? My instinct tells me he may be hiding something? Is this shady or just someone whose hyper sensitive to his privacy?

So far all I have is their word that all rents are current and that it generates X amount of money per month but I’m not comfortable making a 370k investment without actually reviewing some sort of financial documentation to validate what they have said. Should I be okay with simply seeing his books in person? Would you move forward with the deal without receiving documentation in your possession to carefully review or is it enough that he open his books and let me see the numbers?

[Curtis Bidwell]

@Nathan Ramirez This is not uncommon particularly with smaller mom and pop operators. When I purchase a property I simply want to verify my own assumptions - so a personal meeting looking over his schedule C’s, bank deposits, utility bills, Leases, etc will generally suffice on a smaller property. 

I already know what rent should be when/if properly managed.  I know what utilities should run, what the taxes will be in the year after purchase, how much insurance will be, etc... so I’m looking for outliers and reasons for the discrepancy. 

Know your market better than the seller (or their management co), but don’t tell them! Let them tell you everything.  My biggest concern is the facility, not the financials. What condition is it in, what work needs to be done, any deferred maintenance, etc.  

I Also want to know when the leases expire, so I can plan the adjustments going forward. 

Happy Investing!