16 | Trust But Verify When Performing Due Diligence with Nathan Tabor

Today's guest on the Making Money in Multifamily Real Estate Show is Nathan Tabor. 

Nathan is a real estate expert who has the following accomplishments:

26 properties flipped in nine years Grossed over 52 million in sales Raised over a million dollars from investors and has consulted on deals worth over 200 million

In this episode we cover:

 

A couple of sticky situations Nathan has been in How to avoid those situations and some other common pitfalls seen when performing due diligence on a property How he audits rent roll vs collected rent each month How to correctly underwrite late fee income on a stabilized property

 

Quotes from the episode:

 

"I'm not just looking at rent rolls. I'm not looking at leases. I want to see bank statements. I don't care if it's residential or commercial. Show me, if you say, I'm collecting $500 a month, or I'm collecting $5000 a month, great, where are you putting that money? And if the bank statement shows they deposit $300 a month, where is the other $200? Oh well, its cash and I just put it in my pocket. Well, I've learned, having done the deals I've done and consulted on the deals, you can't trust that. You've got to assume that that money is not coming in, because… I learned this the hard way. Just because a rent roll says that Dave is paying $500 a month because that's what his lease says he should be paying does not mean that Dave is paying $500 a month. It means that his lease says he should be paying that much. And I learned that the immensely hard way." "Another number on income that I don't count and a lot of people do is late fees. They will say, “Oh, well they are collecting $6000 a year in late fees”.  Well, late fees means that a property is not stable because if someone is paying late, that means you are chasing your money. So if you stabilize the property and put it in a good management team, what's going to go away? There are late fees, but if you've used $6000 at a 10% cap rate, that's a $60000 value on the property that if you do your job right is going to go away. So why would you give credit upfront to a seller for something that eventually is not, shouldn't be there if you run their property correctly."

 

Reach out to Nathan:

http://nathantabor.com/

 

Thank you for taking the time to listen. If there is something I can do to help you or your business or you would like to introduce yourself, please get in touch:

Web: http://longviewacquisitions.com 

Email: 

*****Thank you so much for listening to the Making Money in Multifamily Real Estate Show! This show covers everything to do with Multifamily Real Estate Investing to help you, the listener, become an expert in your real estate ventures. The host, Dave Morgia, brings on guests who are already experts in their respective fields to discuss what principles and practices they follow that have helped them achieve their success so far.