Question:
“Hi Gary. Question: When buying a Rental Income property, is it customary to request a last available copy of IRS Schedule E on that specific property??? This certainly would be reliable tool to estimate a Near True rental income? Warm regards.”
Answer:
That’s a great question and a great idea.
You never want to go by the income and expense data that the seller’s agent presents in marketing as it’s often inaccurate, especially when the agent isn’t familiar with income property.
So it is indeed customary to get the seller’s Schedule E if you’re buying a larger building, say over four units. If you’re buying a house or a duplex, it’s probably not so critical, though it wouldn’t hurt.
When looking at the numbers, it’s important to keep a few things in mind:
- Annual property taxes will change to about 1.1% of the price
- If the owner manages or maintains the building him/herself, the costs will be lower
- High costs could be a bad or good thing. It may warn of a high-maintenance building. Or it could be that a lot of work was done recently and it’ll require less work for a while
Thanks for the great question!
