Hey Alisha-
If you're not getting expenses, it usually is because the Seller doesn't have them. It's a business, and some people run them better than others. The listing agent really should have pulled something together, but if they are more experienced in residential the numbers are often thin and can't be relied on unless you know what to look for (for instance are management and vacancy included). Without the proper numbers, the underwriting doesn't hold up and you can't really compare to market if you're getting a good deal or not.
What you might try is the following,
- Visit loopnet.com and find a similar commercial listing in your areas (multifamily residential) and reach out to the listing agent.
- The questions you want to ask them are: 1) What CAP rate range should I be shopping in this area, and 2) What is a ballpark "per-door expense" you see/use for your underwriting
Here in CO for instance, per door expenses usually fall around $3,000 per door ($2,500 on the low end, $3,500 on the high). That is an all in number (taxes, insurance, management, vacancy, repairs, water/sewer) so you count your doors, multiply by that number and you've got a solid estimate of expenses. (ex: 10-plex * $3,000 per door = $30,000 annual expense). It's not perfect, but it's far more reliable than anything you'll get from an inexperienced seller/agent.
Subtract expenses from income to get you're NOI, then divide that number by purchase price and you've got CAP rate. How that CAP compares to ranges from you're commercial broker should give you a sense of whether or not it's a deal to pursue.
And no, under no circumstance should you have to pay agent for underwriting - it's part of their job. And if they don't have it, it usually just means it's not available.
Hope this helps.
Best - Ian
