Hypothetical:
Someone is selling their 4-plex…
Is there a technique you use in order to verify rents that each of the units are generating…instead of just taking the person’s word.
Would like to know how you approach before making offers.
Thanks,
-Mike
Get copies of the leases!
Mike,
Yes, ask to see a copy of each of the current leases and make the sale contingent upon getting a hardcopy of each lease XX number of days before closing (you pick the number of days you can live with)…
Additionally, you can ask for a copy of the owner’s Schedule E to verify expenses. This will alsoeflect the gross income for the property.
If the owner refuses, he’s not dealing in good faith.
Keith
You can verify rents through viewing the current lease agreements of each unit. Of course given privacy issues you should not be (nor would any respectable landlord permit) be viewing the tenants application just the lease agreement. This will detail the terms, monthly rents and so forth. Also, try to take a look at the opertaing expenses of the place as well i.e., electricity, heat, water bill, etc.
thank you…
-Mike
also, call up neighboring 4plexes and ask the rents. that will give you market rents which is more important than what the seller CLAIMS he’s getting.