- Missing management fees: mom-and-pop owners rarely charge for their own time, understating true overhead by 5%–8%.
- Deferred maintenance: neglected roads and water lines inflate short-term net income while passing capital debt to the next owner.
- Unpaid utility bills and line losses: leaking underground water lines in master-metered communities can silently drain thousands of dollars per month.
Key Takeaway
Always underwrite using standardized, realistic operating expense benchmarks of 35%–40% minimum rather than unverified seller tax returns.