Hey Guys…
I have a question. I keep running into small apt. buildings where the seller has obviously understated his expenses. Has anyone ever written a clause into their offer something to the effect of : “Offer is based on current income & expense info supplied by seller. If a review of the past 3 years’ of schedule E’s results in a lower value based on the generally accepted formula NOI x ave Cap Rate of 10%, the seller agrees to sell at this price.” PLEASE don’t go tripping over the wording of the clause…it’s the intention that I’m asking about…trying to make them prove their expenses, because they are one of the biggest componants of the value of the property.
Thanks!
Kip