Has anyone spoke/interviewed tenants during due diligence?

Question

I'm sure it's most likely frowned upon but on the smaller scale apartment buildings, during due diligence has anyone ever tried speaking with tenants to uncover any existing conditions or deferred maintenance problems they may be facing?  Sometimes contractors or inspectors may not catch everything.

Bjorn Ahlblad · Answer

I have met tenants and chatted with them in parking lots before making an offer as well as during due diligence periods, even inspections. Why would you not?

Evan Polaski · Answer

Yes.  Who is frowning upon it?  The seller? The current management team? That is all the more reason to do it. If they were keeping their tenants happy, they would have no qualms.

100% I talk to as many tenants as possible at the property.  Sometimes you do need to take what you hear with a grain of salt, or else you will never buy anything.  But chat them up outside, while you are in their unit doing physical inspection, in the common areas.

Robert Rixer · Answer

It's 100% your right and you should talk to tenants as part of your due diligence. As an owner I do understand the annoyance of this, especially if you were to back out of the deal and then having to deal with the issues of tenants worrying they'll be displaced, mismanaged upon sale, etc. I will say most people probably don't talk to multifamily tenants. Office and retail they almost always do.

Alecia Loveless · Answer

@George Voutsinos If the tenants are home I talk with them to try to get a better feel for them personally as well as a feel for the building. It’s helpful to know what you’re getting into. Although at times you will hear wild and crazy things.

Joshua Christensen · Answer

Yes.  It's frowned upon by brokers and owners.  The reality is that the residents are usually there and willing to share all kinds of things.  I tell them I'm doing inspections for the new owners (no need to tell them I'm the guy...)

I ask things like

1. how long have you lived here?

2. Do you like the area?

3. Most think you're there for the current owner and start asking for things to be repaired that haven't been addressed in awhile.

4. Who are the tenants to be aware of?

5. Why do you like living here?

MOstly, generic open ended questions.  They will share a lot of info.  Most throw their landlords under the bus without hesitation.  Take it all with a grain of salt.

George Voutsinos · Answer

You guys are 100% correct.  Just curious what standard practice was among others.

Has anyone spoke/interviewed tenants during due diligence?

Most Popular Reply