The cap rate on a 6-unit I was studying came in at 7.4 on the seller's numbers and 5.1 on mine, and the gap was one line item.
The seller counted the unit he occupies himself as rented at market rate, $1,150 a month, and he has lived there for nine years. Pull that unit out, restate gross rent at five occupied units, add back a management fee he also excluded because he self-manages, and the property reprices by almost $180,000 at a 6.5 exit cap. That is not a rounding difference. That is a different deal. The assignment fee I had penciled at $34,000 was gone before I got to vacancy or capex. What kept the deal alive was that the seller's basis was low enough that a renegotiated price still worked for both sides, but only after I brought the restated proforma to the conversation with the math visible line by line, not as a conclusion. Most buyers in a pool will run the same restatement and either reprice or walk without telling you why. The wholesaler who catches it first controls the conversation. The one who passes it through uncorrected loses the buyer and usually the fee. What does your standard diligence checklist do with owner-occupied units, do you restate them at market rent or do you pull them from the income calculation entirely before you underwrite?
