Investor · Champaign, IL · Member since 2011 · 94 posts · 27 votes
When buying a multifamily with a du diligence period, what is your list of things you are looking for, verifying, double checking and other?
Getting close to making an offer, the selling agent said owner wants to know what I will be looking at during the du diligence period. That got me thinking about a check of list that I should have, so please help me develop one.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
Tenant applications
Basic Contact info
Employment info
Emergency contact info
Email
All invasion of privacy. The seller must relinquish the lease, but none of the above - - buyer can acquire it all for him/herself. Also any CR/BG reports in the possession of the seller can not be redistributed at all.
All invasion of privacy. The seller must relinquish the lease, but none of the above - - buyer can acquire it all for him/herself. Also any CR/BG reports in the possession of the seller can not be redistributed at all.
All invasion of privacy. The seller must relinquish the lease, but none of the above - - buyer can acquire it all for him/herself. Also any CR/BG reports in the possession of the seller can not be redistributed at all.
In addition to the list of items that you would want from the sell and the property itself, be sure to due your do diligence on the market, the city and the county you are buying in. Just of the top of my head.
Police department
Crime reports
Gang activity
Drugs
Sexual Crimes
Call outs to the property and nearby neighborhood
Drug labs
Fire department
Call outs Domestic violence
Drug labs
Building and safety
code violations
Drug labs
Zoning
Is property properly zoned?
Are there zoning changes planned
Environmental Services
Are there any concerns about environmental issues in the area of the property
Flood control
Are you in a flood zone(very important when getting insurance. This can kill a deal. Ask me how I know that)
Neighborhood
Is it single family homes or is it back to back MF
Are there an unusual number of adult oriented retail stores(adult book stores, Tattoo parlors, liquor stores, check cashing, and pawn shop.
Supermarkets available
Bus routes nearby
Access to the highway
Postal Carrier
Ask them anything and everything about the neighborhood
Retail Sales Clerk
Ask them anything and everything about the neighborhood
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
10y
Here is a clause that I have in all of my contracts. It has saved me many times.
I am not a lawyer so have yours review it
The Buyer shall have a thirty (30) day Inspection period from the effective date of the contract. Seller will deliver to buyer property information items, listed in item 3 below, to the extent that the items are in Seller's possession or reasonably available to Seller. Any item not in the sellers possession or reasonably available to seller shall be noted in writing to the buyer. Any delay in the delivery of the listed documents beyond the number of days in the contract, section 7D1, shall cause all deadlines based on the effective date to be moved forward the same number of days as the delayed delivery.
Here is item 3 mentioned above
1.Delivery of Property Information Items: Within 7 days after the effective date, Seller will deliver to the Buyer:
a)copies of all current tenant applications and leases pertaining to the Property certified to be true and correct, including any modifications, supplements, or amendments to the leases (applications, leases, modifications, supplements and/or amendments to be made available to Buyer during regular business hours at the Property);
b)current rent roll (showing lease rent, delinquencies, lease expiration and security deposits paid), certified by Seller to be true and correct;
c)most recent 3 months bank deposits;
d)a copy of Seller's income and expense statement for the Property for the last 36 months immediately preceding the effective date;
e)copies of the Evidence of Insurance for all policies since the last renewal, including invoices, current policy, and copies of the last three years loss run from the insurance carriers for fire, hazard, liability and any other insurance policy that relates to the property;
f)copies of all previous surveys, environmental assessments, geotechnical reports, studies, architectural, engineering feasibility studies, “as builts”, plats, or analyses made on or relating to the Property, including maps, plans and drawings;
g)real and personal property tax statements and any appraisal notices for the Property for the previous 2 calendar years;
h)copies of current capacity letters, and current utility bills from the property's water, sewer, gas electric, trash, phone and cable service providers for the past two years, or permission to access these accounts;
i)copy of existing Property Management Agreement;
a)payroll detail – 2012W-2s, YTD monthly, and most recent Y-T-D paystubs;
b)a current inventory of all personal property to be conveyed under this contract and copies of any leases for such personal property;
c)copies of all notes and deeds of trust against the Property that Buyer will assume or that Seller will not pay in full on or before closing;
d)copies of all current service, and maintenance, agreements relating to the ownership and operation of the Property; including but not limited to: Laundry Lease, Cable/Satellite, Electric, Phones, Leasing, Commission, Advertising or other;
e)copies of all current warranties and guaranties relating to all or part of the Property;
f)current and past capital expenditures for the past three years;
g)copies of all work orders for repairs incurred by Seller for the Property in the 24 months immediately preceding the Adjusted Effective Date; (work orders to be made available to Buyer during regular business hours at the Property)
Here is a clause that I have in all of my contracts. It has saved me many times.
I am not a lawyer so have yours review it
The Buyer shall have a thirty (30) day Inspection period from the effective date of the contract. Seller will deliver to buyer property information items, listed in item 3 below, to the extent that the items are in Seller's possession or reasonably available to Seller. Any item not in the sellers possession or reasonably available to seller shall be noted in writing to the buyer. Any delay in the delivery of the listed documents beyond the number of days in the contract, section 7D1, shall cause all deadlines based on the effective date to be moved forward the same number of days as the delayed delivery.
Here is item 3 mentioned above
1.Delivery of Property Information Items: Within 7 days after the effective date, Seller will deliver to the Buyer:
a)copies of all current tenant applications and leases pertaining to the Property certified to be true and correct, including any modifications, supplements, or amendments to the leases (applications, leases, modifications, supplements and/or amendments to be made available to Buyer during regular business hours at the Property);
b)current rent roll (showing lease rent, delinquencies, lease expiration and security deposits paid), certified by Seller to be true and correct;
c)most recent 3 months bank deposits;
d)a copy of Seller's income and expense statement for the Property for the last 36 months immediately preceding the effective date;
e)copies of the Evidence of Insurance for all policies since the last renewal, including invoices, current policy, and copies of the last three years loss run from the insurance carriers for fire, hazard, liability and any other insurance policy that relates to the property;
f)copies of all previous surveys, environmental assessments, geotechnical reports, studies, architectural, engineering feasibility studies, “as builts”, plats, or analyses made on or relating to the Property, including maps, plans and drawings;
g)real and personal property tax statements and any appraisal notices for the Property for the previous 2 calendar years;
h)copies of current capacity letters, and current utility bills from the property's water, sewer, gas electric, trash, phone and cable service providers for the past two years, or permission to access these accounts;
i)copy of existing Property Management Agreement;
a)payroll detail – 2012W-2s, YTD monthly, and most recent Y-T-D paystubs;
b)a current inventory of all personal property to be conveyed under this contract and copies of any leases for such personal property;
c)copies of all notes and deeds of trust against the Property that Buyer will assume or that Seller will not pay in full on or before closing;
d)copies of all current service, and maintenance, agreements relating to the ownership and operation of the Property; including but not limited to: Laundry Lease, Cable/Satellite, Electric, Phones, Leasing, Commission, Advertising or other;
e)copies of all current warranties and guaranties relating to all or part of the Property;
f)current and past capital expenditures for the past three years;
g)copies of all work orders for repairs incurred by Seller for the Property in the 24 months immediately preceding the Adjusted Effective Date; (work orders to be made available to Buyer during regular business hours at the Property)