Due Diligence in a Multi Family Deal
At the time i am writing this article, i am in the process of acquiring my first property in the US. I am looking for a 160 unit multi family in Kansas as a value add. C to B Type. Mismanaged properties. Long term value add, as a cash flow play.
Doing Due Diligence in a Multi Family Deal
I have to hand it to you. I am not a detail oriented person, because i am the creative type. That is ok if that is you, because the strengths come with the weaknesses. If you are creative you are probably not very reliable, and if you are very analytical, you are probably not very creative. In this arena you need to surround yourself with analytical people, because they will increase your chances of becoming successful in the deal. You essentially fire yourself from the job and get the most anal-retentive person you can find so that they can thoroughly check and double check all the ins and outs of the property. Let them do their thing, because they will uncover details you can use in your deal-making.
You just presented an offer that was accepted. You sent your "analytical dawgs" to see the property. They will check all the 160 units to find if something is not in place. They will check all the financials to check if there are cooked numbers. They will write legal documents with all types of contingencies. You can then come back and renegotiate the deal to a lower purchase price, because you have boat loads of evidence to support your case.
Do you feel safer now? Are you now more confident that you can provide a safer job for your investors? Warm and Fuzzy? Me too. Don't be boomed out if you have to fire yourself from a type of situation you already know you are not strong, because in the end it is all about the safety of principal and you being able to provide the returns to your investors.
The famous real estate investor Ken McElroy has a cheat sheet in his website you can use as a list for the due diligence. https://kenmcelroy.com/
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