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G'day everyone, My name is Bernie from Minneapolis MN.  

Would anyone share with me checklist &/or processes to follow and check off in a due diligence process on a medium multifamily deal.

My objective is to purchase a  50-100 unit class C property in the  S.E. USA 1975 or later construction with a value add or stand alone self sustaining financial model.  Demographics are at least 50K town population; less than 17% poverty; median family household income 35K+; Geographic region: TEXAS, OKLAHOMA, KANSAS, MISSOURI, TENNESSEE, ALABAMA, GEORGIA, NORTH CAROLINA, SOUTH CAROLINA, FLORIDA.

I can probably get a Multifamily DD checklist from some of our guys in the office but the first step and somewhat most important part is getting a deal under contract in today’s competitive market. That means having an LOI and contract ready to go. Maybe you already have those in place. We see new buyers trying to play with the big boys and losing out on the front end by not being prepared to get a deal locked down. A lot of attorneys will tell you each deal is different therefore the contract should be as well. I understand that each deal is in fact different but waiting on an attorney to draft a contract each time will cause you to lose out on many deals. Buyers are not obligated until a contract is signed because an LOI usually doesn’t obligate either party to perform. Having everything ready to go will give the buyer comfort in your ability to close. Off subject I know but we see this all the time. Good luck.

1.  Do the provided numbers make the cash flow you want.

2.  Are the provided numbers actual numbers or proforma?

3.  Are all numbers provided and are they accurate for you

- numbers check out then go for an offer and get it under contract

4.  Verify all numbers ask for leases, rent rolls and tax returns to prove they are accurate

5.  Inspect units to verify condition and repairs needed.

just some of the due diligence steps.

Due diligence is such an important part of the purchase.  It is important that  you have an agent that will assist you in the process.  A general checklist will get you most things you will need, but every property is different and may require different things.  We manage or set up our clients for self-managing so we are very vigilant in obtaining every possible document.  We write them all into the purchase agreement.  Here are some things to include.

Copies of leases and applications

Access to Yardi, Onesite, or other PM software

Documentation of debts, past due etc.

Rental licenses

3 years taxes

Rent roll with lease start, end, amount, and deposit. be sure PA prorates rents and transfers deposits with interest)

Service agreements lawn, snow, cleaning, laundry etc.

Copies of tenant notices  given within 90 days

Operating statements 3 years

Disclosures, LBP, etc

Contracts for improvements in last 3 years

Employment contracts/ payroll 

Insurance policies and claims history 5 years

inventory of property on site (office furniture, common area items, etc)

Repair records for the building 2 years

Copies of bills such as heat, electric, water, etc to verify (also helps with transfer)

Copies of current inspections.

Boiler logs 

Past litigation

Certificate of occupancy 

Tax records (we will pull)

warranties sill in effect

floor plans

estoppel agreement


Historic designation

Prepare lease assignments

Prepare prorated rent and deposit agreement for closing

There are often many more property specific items.  The bigger the property the more items in general.  One thing to remember is once the property closes you should already have everything you need to begin operating.