How to check if the tenants actually pay their rent

Question

Dear BP community,

I am thinking to buy a fully occupied small multi-family house.

How can I actually check if the tenants are paying their rents?

Thank you all in advance,

M.G.

Sarah Ottesen · Answer

You will need to ask for the "rent roll" from the owner.  My property manager suggests to ask for two years worth.  The owner may not want to give you this unless you make an offer, but you can put this in with the contingencies.

Chris Eaker · Answer

@Rich Vetter I'm dealing with multifamily owners who always have a separate bank account. You're right, you may get push back from small time owners, especially those who use their personal bank accounts. Aside from that, I don't know of any other way to verify people actually pay.

Rich V. · Answer

@Chris Eaker Interesting tip. Do you find you get a lot of push back/owners not wanting to provide their bank statements? I would think that the average person probably uses their personal account.

Chris Eaker · Answer

@Mashy Green

You are right, a rent roll is not going to show you if tenants pay, only how much they are supposed to pay. You must ask to see bank statements for the last 12 months and match up the deposits on there with the rent roll, and cross check all that with the leases. Do they all match? If not, why?

Sarah Ottesen · Answer

@Mashy Green, I am not sure if there is an authentic way you can know.  However, you can also take a look to see how long their leases have been in place.  More than likely they will not renew a lease if the tenant is paying.

Mashy Green · Answer

Thank you! But how can i know this is an authentic, real and honest rent roll, maybe the owner just made it up for the sale?

How to check if the tenants actually pay their rent

Most Popular Reply