Page 139 - Trump University Commercial Real Estate 101

Ho w to Disco ver the Truth behind a Deal

Security Deposit Account Statement

The numbers on this statement should match up with the rent roll.
They better, because you will become liable for that security deposit
account. When those existing tenants move out, you must give them
the security deposits they put down when they became tenants.
Let ’ s say there is not enough money in the account to cover all the
security deposits. It ’ s time to contact the seller and ask where the rest
of the money is. Require that the account be completely funded prior
to closing.

Utility Bills

Get copies of all utility bills for the past two years so you can match
these up with the expenses on the operating statements. Some owners
will say they don ’ t have the past two years of bills. In that case, simply
ask for access to go online at the utility company websites and get
them, or ask for permission to talk to the utility companies. If the
owner does not allow you access, something is wrong.

Property Tax Bills

Not only should you get copies of property tax bills for the past two

years, but also check with the assessor ’ s office to find out when the
property will be reassessed.
Many states reassess properties at the time of closing. In most
cases, property sells for a higher price than it previously sold for, so
property taxes go up.
That means a dip in precious cash flow, unless you anticipated it.

In fact, this one item could have a big effect on your deal.

Service Contracts

Look at all contracts with vendors who provide landscaping, parking
lot maintenance, pest control, laundry facilities, elevators, pools, cable/
Internet, and so on.

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