I am curious as to what kind of paperwork do you request from a seller of a residential rental property?
For example, I know to ask for rent log but do I also need verifiable receipts to support the rent log (in case of doctored logs)?
A list of paperwork that I should request to be made available when making an offer would help.
This is not an all inclusive list, but should get you started:
- Get the seller to sign an estoppel letter. This will state the agreements between the landlord and tenants.
- Get copies of all the leases. You’ll get to see what terms the tenants are living under and when the lease ends (or if it’s in a month-to-month status).
- Ask to see the last 3 years of the seller’s Schedule E for taxes. This will show you what the seller is claiming to the IRS for income and expenses. While they may try to give you as a buyer inflated income and smaller expense numbers, in theory they should at least be telling the IRS the truth.
- Verify the property tax with the county Tax Assessor’s office. You can ask the seller what the taxes are, but you can just check this yourself with the county.
- If the seller pays ANY utilities, ask to see several months of utility bills. You don’t want them quoting you the lowest amount they’ve ever paid and you taking their word for it.
- Check around with some insurance companies to get a few quotes of what it would cost you to insure the property. You can also ask the seller what they’re paying and compare the numbers.
Hope that helps.
You get copies of all rental agreements, accounts concerning deposits (and be sure to get the deposits themselves).
You want esstoppel letters from each tenant concerning their rent and deposit, and type of rental agreement.
I would not buy a rental with existing tenants without making an appointment to talk face to face with each tenant. That’s part of starting off on the right foot with a good relationship.
One of the things I ask in the face to face is about what repairs they need done when I take over. Believe me, tenants will tell you if anything doesn’t work, and the seller will not.
The face to face also helps to evaluate how cooperative each tenant is, which helps me decide who I will keep and who gets their walking papers.
I also ask if the seling landlord has promised them anything. That is then verified with the seller. Renters make things up, but on the flip side, sellers promise things to their tenants, repairs, upgrades, etc. The buyer isn’t obligated to fulfill the promise, but it does cause hard feelings if the tenant performed as they promised and then didn’t get what they were promised. I want to hear both sides of the story before close of escrow.