Hi everyone, I'm in the process of buying a multifamily property and something has come up in my due diligence that I wanted to run by the community. The realtor provided me a rent roll of the current tenants and the ...

I only mention this since you said "the cap rate" which makes me wonder if you thought one of those other ones.If you intend to keep those 2 illegal units in place (which I don't recommend, but people do it every day of the week), then I wouldn't go complaining to the tax assessor about your high taxes and the discrepancy with the building department's # of legal units.

The tenant seems like a reasonable guy, but there is now a $1200 discrepancy in what I think is fair vs what he was told is fair by his landlord.- So, after an unpleasant 4 hours of phone calls on a Friday afternoon/evening and what I am sure will be over $1000 in emergency plumbing service, I am now looking forward to an unpleasant Monday morning of Me vs.

Any discrepancy of value in this instance isn't the appraiser's fault (and believe me, there are plenty of instances where appraisers are at fault), but inexperience and probably putting gold teeth in a dead horse.All of those items listed previously are nice and MAY make the house sell faster, but to think they're worth 90K is way off base. 

You could refinance and pull cash out the property to repair those discrepancies now or sell it for a profit.

It's important to remember that their commission goes up when they get you into a deal, so it's best not to be too trusting of them. 2) Look at comparable sale prices of other properties in the area; this will give you an idea about how much the property should be worth if there are no major discrepancies between those properties and yours. 3) Do some research on taxes - if there's a major discrepancy in your assessment and what you could find out about market value, this is worth getting into.4) Remember to look into closing costs and all possible fees that come with buying property (if there are any).

The tenant has, in fact, not been paying this premium because previous landlord(s) have evidently not picked up on the discrepancy.

If you have a partner, make sure you are both on the same page as far as how much you'll need from them after closing; 5) When disclosing your purchase price to an underwriter, disclose it as "the lower of p & l" - this way if there's a discrepancy between your appraisal and your P&L statement or tax returns, lenders will prefer your lower number since that's closer to the actual value of the property.

I am worried that after the offer gets accepted, the appraisal value might come in significantly lower than the contract price.I understand that discrepancies happen, and I’m not concerned about a small gap (10-20k), however, if the appraised value would come in significantly lower (50-100k, or more), then I would simply not be able to afford this property (given my then lower down payment, and worse mortgage interest rates).I am wondering if anyone has any experience with what happens in such cases?

I am curious what the discrepancy here would be with the bottom line (your cash flow).