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Do you know all the elements of a rent roll? This book is intended
for those who are on the verge or in the throes of buying
income-producing property. One of your foremost tasks in the
acquisitions process is to validate contractual rental revenue.
Rental revenue is provided to prospective investors under the terms
of a confidentiality agreement. The seller will provide you with
certain financial data, including the rent roll, for your
inspection during the due diligence period. It is up to you to
validate this information. Buying rental property is not an impulse
purchase. The acquisition process is a significant time commitment
and one that can be very rewarding. As a prospective buyer, you
need to know how to build, understand and use the rent roll to your
advantage. This book is a technical guide to rent roll analysis.
The objective here is to narrow your attention to one thing and one
thing only: estimating the validity, or reliability, of contractual
rental revenue collected from income property. Why is this
important? Because getting it wrong undermines any and all further
work performed towards the goal of estimating Net Operating Income
(NOI). If the revenue number is suspect, over-reported,
under-reported or credit quality is without support, then what's
the point of devoting energy, resources or dollars to completing
the rest of the equation towards NOI? Without a solid foundation
based on valid rental income the balance of your due diligence is
an exercise in futility.
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