All Forum Posts by: Christina Luton

Quote from @Joel Case:

Is the 4% cap rate based on their numbers that they cannot backup or based on your due diligence? If it were based on their word, I would be fearful also. 

That is based on their P&L that seems to be full of fluff. 

Quote from @Nate Sanow:

So I haven’t done much on that property type specifically but on single family / smaller multi, I’ve met MANY a small time mom pop style landlord who really truly has NOTHING for their paper trail… many a time you figure out 1/2 their units paid in cash and they may not have had to report to taxes…And they weren’t really running things like a business owner, but almost like an employee who hated their job or didn’t really know what to do..  etc etc etc… I can almost imagine your seller could possibly fit that same mold. If so, it’s not a true red flag IMO, but it’s something to be aware of and add to the negotiations of why you need to buy this for ____ (whatever price discount compensates for the added risk of lack of DD). just my $0.02. 

I hear you. And I agree. I think my doubt is causing me to second guess the agreed upon price at the moment to deal with the issues and risk I am having to work with to make this come together. Thank you for your feedback.  

Quote from @Billy Daniel:

I've run into sellers who have almost no paperwork.  I don't automatically run from the deal.  A lack of organization and accounting doesn't mean its a bad deal, it just means you have to be sure you can make the property do what you need it to do.  My experience with this type of owner is actually pretty good.  A lack of records usually means a discount in price!

Can you talk to the tenants?  They may be able to answer your questions (somewhat)!

Thank you for your response. That is my other concern. The current cap rate for deal is a bit over 4% but that is assuming the seller is presenting accurate numbers. I tried to negotiate for a deal over 5% cap but they weren’t interested in that low offer. Not sure if I’m second guessing out of fear to move into a larger space or just truly concerned about some issues that have come up?

We are under contract for a motel/rv park that is a value add site. Seller has not been able to provide any due diligence including contracts with long term rv tenants, proof of income in any way, proof of any expenses and now proof of insurance. Is this lack of available information normal? Should it be a red flag for any reason? TY for the feedback!

We are under contract for a motel/rv park that is a value add site. Seller has not been able to provide any due diligence including contracts with long term rv tenants, proof of income in any way, proof of any expenses and now proof of insurance. Is this lack of available information normal? Should it be a red flag for any reason? TY for the feedback!

@Marian Smith yes I just checked those out yesterday. They are really nice. Easy to deal with and good looking. It’s a nice cost effective option.

@Michael Noto it is a SF flip with an end buyer. That being said, do you think different types of flooring isn’t choppy? What would you do in the rest of the house?

@Frank Wong are you seeing a lot of the LVP in the West Coast especially the Bay Area?

@Frank Wong thank you for the suggestion!

@Teri S. Thank you for the suggestion!