7-unit where four tenants have no lease on file at all

Underwrite off what lands in the bank, and until you see the bank you don't have a number at all. Ask for twelve months of statements for the operating account with the deposits visible. If he won't produce them, that's your answer about the 5,320.

The round-number P&L is the tell. Nobody's actual water bill is 2,400 a year exactly.

The cousin at 690 is going to leave the day you close or stay forever at 690 and you'll spend a year deciding which is worse. Price that unit at zero in your head and see if the deal still works.

Also 690 versus 825 for the identical floor plan usually means the 690s haven't been touched since the Clinton administration and the 825s got new floors. Walk all seven. Not four of seven, all seven, including the cousin's.

Three separate numbers are doing different jobs here and you're trying to make one of them carry all three.

The number you offer on comes from collections, meaning money that actually cleared. Ask for twelve months of bank statements and reconcile deposits against the rent roll month by month. If the deposits average 5,100 against a stated 5,320, you've found your real vacancy and collection loss without anyone telling you.

The number the lender sizes on is its own thing. At five units and up you're in commercial territory, and a commercial lender underwrites the property's income, generally what's documented rather than what the market suggests the units could earn. If four units are month-to-month with no signed lease, expect the lender or the appraiser to want estoppel certificates, which are short signed statements from each tenant confirming rent, deposit held, and that there's no side arrangement. Those estoppels are also your best defense against discovering after closing that someone prepaid six months. Ask your lender in writing how they treat undocumented month-to-month income before you commit to an offer, because that's the assumption the whole deal turns on.

The 6,300 market number belongs in a separate line labeled upside, and it costs money to get there. Seven units at 135 a month is 11,340 a year of income, which at a 7 cap is roughly 162k of value, so the seller knows exactly what he's leaving on the table and is pricing accordingly.

Security deposit handling at transfer is set by state law and the rules differ substantially. Have your closing attorney tell you what your state requires and how it gets documented at the table.

What does 585k break down to per unit and how does that compare to anything else that's traded there in the last eighteen months? 83.5k a door for a 1968 building with owner-paid water. I'd want three or four sales to sit next to that before I worried about the leases.

Owner pays water on a seven with all two-bedrooms and no submeters. Find out how many people actually live in those units, because that bill is a function of bodies and nothing else. I've watched a water bill double because one unit went from a couple to a couple with two adult kids.

The thing that would make me slow down isn't the missing leases. It's that all three signed leases expire within eight months. That means in your first year you're negotiating with every tenant in the building at once, four verbal and three rolling off, while you're also learning the building.

That's actually an argument for buying it if you have reserves and a stomach. It's a bad argument for buying it if 5,320 is the number you need to make the payment.

Who's been managing this? If it's the seller with a shoebox, ask him how he collected. Cash, checks, an app. That answer tells you whether the bank statements will even show what you're hoping to find.

690 for a two-bedroom sounds like a small market number to me and 900 to 950 sounds like a different market entirely. Are your comps in the same few blocks or across town? That spread is doing a lot of the work in your upside case and I'd want it nailed down before I paid for it.

Honest question for you rather than an answer. You said your plan was a duplex. What changed, the deal or the ambition? Seven units with four handshake tenancies and a rebuild of the whole rent roll in year one is a job. Not a big one, but a job. I'd want to know I wanted the job before I priced it.

@thicket that's a fair reframe. @wren, if you do want it, the offer can carry the uncertainty instead of your bank account. Estoppels from all seven as a condition, bank statements in the first week of diligence, and a deposit reconciliation that either produces the money or credits you at closing. Then you're not guessing about the 5,320, you're making the seller prove it or pay for the gap.

Right. And if he won't sign an offer with those conditions in it, you've learned what the four verbal units are really worth without spending a dollar on inspections.

I've been the person who doesn't write the offer for three weeks and I promise it doesn't get clearer with staring. Write it at 4,830 documented income plus a nominal number for the four unpapered units, put the estoppels and the bank statements in as conditions, and let him counter. His counter is more information than another week of your spreadsheet.

The number I'd want before I sent it is your monthly payment at whatever quote you actually have in hand, because everything above is arguing about income and none of it matters if 4,830 doesn't cover debt plus water plus taxes with room left over.