Rent Roll Analysis
How does one properly do this? I am looking into buying a few multi-unit properties, and since rent rolls are important, what is the proper due diligence that a buyer should perform in order to do the best job to analyze the rent income history of a given property?
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Any other ideas? I wish I knew someone who owned some substantial property so I could find out how they deal with it.
Join a real estate investors club in the area. There should be more than a few people there that could answer that question.
Ask the seller to show you his/her Schedule E on the tax return. You can also ask to see bookkeeping records.
As for local rents, call several property management companies and tell them that you are considering buying in this area and might be needing property management. Then ask about rental amounts and ease of finding tenants in the area.
I have a pretty good size portfolio that spans multiple states. In fact I was recently looking in Southern WI. What I have told you is what I do myself or what I tell my less experienced property managers to do. I have given you several ways of checking the validity of the rent rolls. Doing all of these is probably overkill, but if you are really concerned about the rents, this may give you comfort.
[ Edited by edmeyer on Date 06/22/2007 ]