Hiring firms to do due diligence

Multi-Family and Apartment Investing
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Hiring firms to do due diligence

Barry Je
Tacoma, WA · Member since 2017 · 33 posts · 7 votes

I've read in various books that one can hire a firm to do the due diligence for you.  Can someone recommend me a firm that does this, and what are the costs typically (ie percentage of purchase price, single dollar amount, etc.)

I'd like to do it myself but would feel 1000 times better knowing I'm doing it in addition to a professional company and see what disparities arise between their analysis and mine. 

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Michael Le
Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
8y

What sort of due diligence are you talking about? Are you talking about underwriting a deal you're looking to invest in? Or are you talking about unit walk throughs, checking roofs, foundation, plumbing, mechanicals, lease audits, etc? If it is the former then I would say to hire a coach who can assist you with education. If it is the latter, a property management company can do all of that for you.

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  • Michael Le
    Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    8y

    What sort of due diligence are you talking about? Are you talking about underwriting a deal you're looking to invest in? Or are you talking about unit walk throughs, checking roofs, foundation, plumbing, mechanicals, lease audits, etc? If it is the former then I would say to hire a coach who can assist you with education. If it is the latter, a property management company can do all of that for you.

    2Reply
  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
    8y

    @Barry Je, @Michael Le pretty much nailed it.

    I would say you could also get the help needed by partnering with an experienced sponsor.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Percy N.  Ya Know Percy as I was sitting her sipping my coffee and reading and posting on BP

    I got to thinking.. someone should start a syndicator consulting firm..

    IE consult with investors and do their due diligence on the syndicator the project etc.

    charge a nominal fee but give the investor some piece of mind that a third party went through the offering docs.. did some due diligence on the market and such.. ???

    not sure if there would be enough demand..

    and of course most syndications you need to be accredited and many times accredited folks simply don't need help they did not become accredited because they cant look and anaylys a deal but many are also busy and would like to pay a small fee to have it all summarized for them  

    what do you think ? million dollar idea ??? :) Ok off for another cup of coffee

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Percy N. further my thoughts are your sitting in SEattle the deal is in GA or TX.. you can have your SEattle attorney look through docs.. and any attorney out this way is going to be 350 to 500 an hour.

    and what are they doing to know about the GA or TX market..  one stop shop is what I am alluding too.

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  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
    8y

    @Jay Hinrichs, that is a good idea. One would have to think through the potential liability issues.

    There are some invite only accredited investor groups (not sure I am allowed to mention the name) that informally share DD. I also belong to an Angel investor group that "syndicates" investments in early stage companies.

    Not sure what an investor would be willing to pay for a service such as this, but I am sure the return would be higher if we can participate as equity partners in the deal. I think many syndicators offer coaching programs as a deals to increase deal-flow.

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  • Yonah WeissPro Member
    Cost Segregation Expert and Investor · Lakewood, NJ · Member since 2017 · 1k+ posts · 1k+ votes
    8y

    @Barry Je

    You can try realdiligence.com they are a very fast and thorough firm specializing in due diligence and lease and CAM abstracting, among other services. 

    I agree with @Michael Le that it is best to get an education. It took me over a 6 months of working as an assistant underwriter to fully understand all of the nuances. Time is a key factor, especially if you have a few deals that you are looking to close. In the meantime it's good to feel that everything is being looked into. Of course, it all depends on the deal. If it is a SFR or small Multifamily, the leases should be pretty standard. But then again no two leases are the same.

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  • Scott Meitus
    Contractor · Minocqua, WI · Member since 2016 · 44 posts · 12 votes
    8y

    This is what I do for a living.   Message me if you would like.

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