What checklist should I have for Due diligence?

Question

I am in contract and doing due diligence and wondering what I should I be looking for. This is my first deal and I don’t want to miss anything for my DD, also i am doing this out of state. It is an offer in on two duplexes and contingent to 3 day Due diligence. Thanks you all your help!

Nick Troutman · Answer

@Stephanie Simmons wow. Ok thanks

Stephanie Simmons · Answer

@Nick Troutman

Get referral on a good home inspector from another investor. I’ve only run across one good inspector over the last decade.

Nick Troutman · Answer

@Stephanie Simmons Thanks for this. I just finished Jay's book. Super helpful. Though I am doing this deal out of state, so I am not actually able to see it in person. I am just trying to cross my t's and dot my i's.

Nick Troutman · Answer

@Andrew Carlson Thanks so much

Andrew Carlson · Answer

@Nick Troutman

I have one in my car. I’ll try to send it your way when I get out of work 0800 weds morning

Andrew Syrios · Answer

Glad to hear it Nick, good luck!

Nick Troutman · Answer

@Andrew Syrios Thanks. This was what I was looking for.

Stephanie Simmons · Answer

Also - Jay Scott has a book on estimating rehab costs that you might want to check out - it has a very detailed review of the home condition.

My major ones are:

- Foundation & overall structure (termites, sink holes, evidence of water damage/mold)

- Roof needs to be replaced every ~12-15 years so if it hasn't then that will need to be done

- AC - 50/50 shot if over 10 years old.

- Look at plumbing - copper might need replacing & polybutylene pipes need to be replaced

- Had an insurance company refuse to insure a property with a water heater over 10 years old...

- If houses really old you want to make sure that the Electrical Panel has been updated or you will have to in order to get traditional mortgage financing or sell.Also check on sex offenders and school ratings if the target market for the area is people that have kids (I check before I make an offer).  Heard stories of neighbors with really loud barking dogs that have killed their ability to re-sell (flip)

I relied on the title company to do all the lien searches, etc.  The home was an REO that the bank had owned for about 4 months in a planned subdivision and was only 20 years old; and there were not any outstanding liens.  I might have gotten lucky - maybe some others can provide feedback on that method....

But if you are buying vacant land or at auction or there are tenants - all those things present specialty issues

Andrew Syrios · Answer

I'm biased, but I would go with my method and checklists, which I discuss here: https://www.biggerpockets.com/blog/due-diligence-ultimate-guide

Kenneth Garrett · Answer

@Nick Troutman

You may need to submit multiple requests if it’s through the county as it’s possible each department has its own FOIA officer.  Building Department, Zoning Department, Water Billing Office.  Each jurisdiction operates a little different.

Good Luck.