The rents in the agent's analysis were only the seller's rents, and that is a case worth studying

Estoppels are the answer here, and hardly anyone on the small multifamily side asks for them. The other check worth running is a rent survey on the same few streets, not the whole zip code. On a 4 unit, 950 versus 725 describes a different building. A management company pulling in-place rents plus what's actually signed in the last ninety days within half a mile gives the only number worth underwriting to.

The service question buried in this is what an investor agent is actually selling. If it's a file with a cap rate at the bottom, that file has to be sourced or it's decoration. Sourced means every rent tied to a lease, an estoppel, or a signed comp. Cairn, did he ever say the numbers were verified, or did you both just let it slide?

I've been looking at whether to build this kind of service, and this thread is useful in an uncomfortable way. Two questions. Did you pay him separately or was he paid out of the listing side? And would you use him again on a deal where you did your own verification?

The plumbing line is the one that gets me. "Appeared serviceable" is a phrase that means nothing and everyone writes it. Did you have a real inspection with a camera down the lateral, or just the agent's walkthrough?

An agent handing over a spreadsheet with unlabeled sources is a habit problem, and it's fixable in a day. Every number needs a source column. Rent roll, estoppel, independent comp, seller claim. Once the words "seller claim" sit next to 950 in the same row, nobody removes a contingency by accident. Cairn, worth sending him this post.

Worth pushing on the cause here. A 340 a month shortfall is 4,080 a year. At this purchase price, that's roughly 0.9 percent of purchase price in annual income, so on a straight cap basis the building was worth something like 45k to 60k less than the price paid, depending on the rate applied. That's the real number, and it dwarfs the 11,400 sewer. The sewer is a capital item that would have surfaced eventually. The rents are a permanent haircut until the units turn. So the failure wasn't the walkthrough. It was pricing the building on income with no document behind it.

@hannah_west29 has the arithmetic right and I'd go one step further. A buyer's agent file is never underwriting. It's marketing with numbers in it, even when the agent is honest and well meaning, because the agent is paid on close and the buyer is not. On every small multi, the trailing twelve should come from bank statements or actual deposits, not the rent roll, and the seller's cooperation on that belongs as a condition before anyone spends money on inspections. If a seller won't produce it, that tells you what the rent roll is worth. Cairn, an eight month lease at 725 would have been findable on day one for free. A cousin at 640 shows up in an estoppel or in a conversation with the tenant.

A useful checklist follows from a case like this. Estoppel letters, a source column on every rent line, camera the sewer line before closing. Three items worth confirming before signing anything on a small multi.

The part worth carrying forward is that the agent did not lie. The real risk with agents is rarely someone misleading a buyer outright, it is a person typing what they were given while neither side says out loud what that number actually represents. That is a far easier trap to walk into than outright deception. Thanks for writing it up with the numbers, cairn.