Is it appropriate to ask for the sellers schedule e right off the bat?
I have a good gut feeling about a property I am viewing. They listed the income and expenses sheet on the website, however, I am not sure whether or not these numbers are accurate. I would never blindly trust someone else’s numbers without validating them myself. Therefore, would it be appropriate for me to ask the seller or the sellers agent for their schedule e right away?
[{"id": "hqi8iv2", "text": "Ask for a p&amp;l at a minimum and if they won\u2019t provide \u201cuntil we have a deal\u201d then write based on their numbers with the thought that you are warranted in re-trading if those numbers are completely off base from what\u2019s on the tax returns", "replies": [], "depth": 1}, {"id": "hqiclao", "text": "Generally a broker will want to get an LOI and lay out in your LOI that moving to PSA will require upfront due diligence to verify accounting. Offer to sign an NDA. \n\nAsk for 1. P&amp;L 2. Expense Report 3. rent Roll", "replies": [], "depth": 1}, {"id": "hqipm5q", "text": "It is rare that you will get the \"true\" figures posted on a website and never rely on the proforma created by the brokers. I've seen a number of OM's that I like to refer to as \"unicorns\" because the projections they use will NEVER happen and never have occurred in the past...and these are from the largest commercial brokerages.  When underwriting a deal (as suggested above from other posters), I always ask for the current P&amp;L in addition to the last 2 year's P&amp;L and current and up to date rent roll. Sometimes they will give it to you, other times they will have you sign an NDA for the info. You won't see a schedule E until you have a close to agreed upon LOI or signed PSA.", "replies": [], "depth": 1}, {"id": "hqj57ah", "text": "Why would you underwrite using the sellers numbers? Run your own. You can verify in place leases and you should have your own assessment of the market leasing environment. Expenses are also easily underwritten using your own assumptions / experience and by talking to service providers to understand probable costs.", "replies": [], "depth": 1}, {"id": "hqjqnnz", "text": "I have required the following documents prior to submitting an LOI.  I've rarely had issue receiving them.  If there is pushback, it's a red flag (to me).\n\n\\- Rent Roll for last three years\n\n\\- Full Ratified Leases\n\n\\- Income/Expense for last three years\n\nAdditional information required: Age of HVAC systems.   Age of mechanical systems.  Age of roof, last repair, etc.  This is to determine potential deferred maintenance.  Some require an NDA (which I offer at time of request).  Others do not.  Regardless, you require all this information to submit a realistic offer, as all these factors impact the value of the property.", "replies": [], "depth": 1}, {"id": "hqk1ffc", "text": "Never trust broker offering memos, especially in this market.  Unless it's a net lease to a credit rated tenant, and a really good property, like a Starbucks with drive-through. Maybe then you can chance it.\n\nBut retail, office, multifamily?  They always overstate rents where possible (rent stabilized rents in NYC for example are public knowledge), and ALWAYS understate operating expenses. huge concessions have been offered the past two years, so even the leases may not mean much.  All the leases represent is what the leaseholder had the right to collect, not what they agreed to collect.  While historical financials are helpful, and a Schedule E ideal, you really have to know the market.  Assume you will have to renegotiate all leases to market to keep the tenants in place.  This is true for 95% of property nationwide.  \n\nFor anything over $1MM, I wouldn't buy a property without hiring my own structural engineer to do a Phase I PCA.", "replies": [], "depth": 1}]