| Sellers and real estate agents love to make | | | | buyer beware! |
| prospective buyers believe that their properties | | | | Now, when accounting for vacancies, always |
| never have any vacancies and if they do, it is | | | | realize that it is impossible to have 100% |
| just a temporary thing and with the right amount | | | | occupancy. There are always people moving in |
| of "elbow grease" and the right vision you can | | | | and out and units take time to clean and prep for |
| turn it around and do what the previous owner | | | | new tenants. Always ignore pro formas and |
| couldn't. This seems to be the line of logic that | | | | projected occupancies and NEVER pay for your |
| you hear again and again. The first thing that can | | | | own upside in the deal. It's laughable how sellers or |
| give you perspective is to acknowledge the fact | | | | brokers will tell you all about the money that can |
| that if the current owner could fill up the vacant | | | | be made if you just do a little of this or that and |
| units or make additional repairs, wouldn't they | | | | then they want to have you pay them for this |
| have done it already? Are we really supposed to | | | | potential profit! You earn your money from your |
| believe that their units are not full just because | | | | hard work, vision, and risk taking, not theirs! If |
| the owner was too lazy or just didn't feel like | | | | they could have done it they already would have. |
| doing it? Always keep in mind that when someone | | | | When determining the effective occupancy, |
| has hundreds of thousands or millions of dollars | | | | recruit the help of your prospective management |
| tied up in a property they have every incentive | | | | company. They have tricks of trade that help |
| to do what they can to keep the units filled. | | | | them know what the real occupancy is. Also, be |
| However, if you believe that you have the magic | | | | sure to go off of current rent rolls that can be |
| bullet to do what the previous owners couldn't, | | | | completely audited. Don't believe rent rolls supplied |
| then you deserve to make the big bucks for | | | | by sellers either. The only rent rolls that can be |
| taking on the additional challenge and risk, but | | | | trusted will come from a third party source. |