Tax returns and/or rent roll being cooked?

We are doing due diligence on a park.

By our calculations from the rent roll, the annual gross income should be about $123,000. Yet, the tax year income reported is only around $75,000.

Are the tax returns and/or the rent roll being cooked?

How would you solve this issue?


The owner may be accepting cash as lot payment and may not be reporting it on his taxes. You may want to ask for the bank deposit slips and/or his monthly bank statements to check deposits.

If the owner’s asking price is based on gross income of $123k, definitely make him prove that’s what’s actually being collected.

@GJS , as per your question:

  • “Rent Roll shows Annual Gross Income = $123,000”
  • “Tax Year Income = $75,000”

You correct.

They are either:

  • Cooking The Rent Roll
  • Not Reporting All The Income

They are probably receiving a lot of cash payments.

However, I highly doubt that they are depositing all those cash payments into their Business account as their Income Tax does not show that income.

They are trying to have the best of both worlds.

Good luck with finding the truth.

I would make a offer based on the tax report of $75,000 and tell him he will need to prove otherwise if he wants a better offer.
Put the ball in his court and make him prove it.