I know there have been a number of threads lately where everyone piles on about how important it is to get golden P&Ls, taxes and bank statements from sellers
Yeah, fine, I guess.
But I have never seen that as the key info for basing my buy/pass decision. I think it is more important to build my own P&L during DD and to build a P&L of where I am going to take the property.
It is not that hard. Look, here are the main expense categories:
You can nail down most of those or get pretty close by making some phone calls. Some of those like travel and even payroll are pretty much up to you – is the park in your back yard or are you going to have to fly to it; how often? How much are you willing to pay a manager. Are you going to hire an in house handy man? Who is doing the yard now? Talk to him and see what he wants to continue. An insurance agent should be able to give you a pretty close number on what a policy will cost you. Who cares what the previous owner was paying; are you going to have the exact same coverage? Are the prop. taxes going to change after the sale? Better call the county and find out; it does not matter what the seller was paying, it matters what you will be paying.
It makes little sense to me to go by the repairs/ maintenance expenses paid by the seller. If it is low, maybe he has not been taking care of things and it therefore is going to be high for you. If it was high, maybe that means he took care of a lot of issues that you will not have to deal with. Who knows? Better to figure out the condition of that part of the park you will be responsible for and get an idea of what your costs will be going forward.
It would be useful if he could provide you with the utilities bills, and if he give you the"my dog ate the receipts" routine, then he should allow you access to the utility accounts online. Its all there.
In the All Other category are all the piddly accounts like banking fees, office expenses, postage, as well as accounts like legal services that (hopefully) only come up once in a great while. They add up, but you really can’t go by the sellers costs (is his office in a spare bedroom like mine or does he rent a real one that you have to put on your shoes and drive to?) Better to add them up as best you can and throw in a few hundred for who know what.
I am not saying I don’t want anything from the seller, I will take all I can get. And I understand that if you need a loan, the bank may require it. What I am saying it is I think it is far more important to look at the numbers that I build through independent research and from my experiences than the numbers provided by the seller.