Would you buy a Park without Bank Statements from the Seller?

Hey Everyone,

I have a Park under contract and the Seller has provided just about everything I have requested with the exception of his bank statements to support the rent roll and tax statements.

The seller owns three other parks and deposits everything into one account for all of them and claims getting cancelled checks for 24 months would be unreasonable. I pressed him on the issue and how it could affect the financing and he basically said, “take it or leave it.”

His rent roll is very detailed and shows he has all sorts of management problems and how he writes off debt every 6 months for tenants that get behind, does not assess any late fees, so it does seem like if he was trying to cook the books this would look a lot cleaner on the surface.

The rent roll and taxes match up within a few hundred dollars. I am on the fence. Would you move on or keep going?

Thanks for sharing your experience and thoughts.

I’d certainly want to see the proof of deposits matching the rent roll. You may need all four rent rolls to verify.

If your feasibility period is 60 days, you can have him start tracking this separately for you so you can have a 2 month snapshot of the collections. Otherwise, this is up to your own comfort level. If the taxes match up, then I doubt he’s cooking the books on you. Also, is he financing this or are you going to a bank?

I would like to finance it but don’t have to. I expect the banks will want to see deposit statements…

I would ask the bank you intend to use. Most do, but some don’t. If you go unleveraged, then it’s going to kill your cash-on-cash return.

A lot of mom and pop sellers are not type A personality types like the new wave of professional park buyers.

Not having a rent roll is clearly a negative, but how big of a negative depends on:
-how likely you think he is scamming you - intentionally misrepresenting the occupancy
-how likely he is delusional - not collecting the rent he thinks he is but doesn’t even realize his park is underperforming.

The chance of these are subjective and gut feel based on his other records and your conversation with him.

While buying my first park if the seller had had no bank records that would have been a no questions asked deal killer. Now, seeing how unorganized many sellers are, I would be significantly concerned but not to the point of it killing all deals.

As Charles mentioned, an extended due diligence period is a totally reasonable solution to this as well.

Yes, I purchased a park without bank statements. Seller was depositing money to personal account. He did give me all of the leases and you could also count the homes. You can figure out expenses as well. Call water company, electric and they give you the info. I trusted the seller after meeting with him and speaking for several months.

I think @Brandon made a good point - confirming the rent roll or taxes against the account for all of his 4 parks can give higher confidence the numbers are real.

If I cannot get it financed the cash on cash return will be terrible like @CharlesD said, but I guess worst case scenario is that I operate it for a couple years and then pull out the equity with my bank statements to improve that. This assumes that rates remain attractive for a couple years, which historically speaking they should, but probably will not be low as they are today.

With this and speaking with the tenants I can probably get a good guess whether they’re real or not. I really appreciate everyone’s comments…

Thank you @jhutson for the kudos. Confirming the rent roll is essential; you can count up the homes on site, but for all you know, X% of the homes on site have not paid rent and will not do so once you buy the park. What is X? You need the rent roll to know what Seller thinks (or says) X is. But there are many “delusional” owners as @Noel_S described and X may be a lot bigger than you thought once you start enforcing the rules (and demanding payment of rent). The bottom line is whether you think you can make the homeowners (tenants, residents) that are there pay, and if they don’t, can you replace them easily (test ad)? I’d like to know that they have been paying by comparing gross receipts deposited to the bank account with the rent roll – I don’t need to match every dollar but within 5% let’s say. If there’s no historical records to show that, I’d better be pretty sure I’m going to be able to collect the gross rent roll that I’m counting on. Mobile homes are hard to move but easy to abandon.


In the end, it can all be fake, seller who wants to sell can show whatever they want as far as rent roll and bank statements. They could deposit extra money and say tenant is paying when they are not.

Once you start enforcing the rules, I have seen everyone pays their lot rent or they either leave or have to sell the home.

Couldn’t agree more with Brian here. We buy most of our stuff off-market so it is very unlikely that our sellers are cooking their books to look good for us. Usually, they are cooking their books for the IRS which has the exact opposite affect. This is pretty much the reason we negotiate off of their tax return. Anyways, you should always be very conservative on your underwriting of these types of deals. You know the tenant base so estimate a realistic vacancy and bad debt loss on the front end and adjust your price if needed.