What’s One Thing You Never Skip During Due Diligence?

Question

The more I learn about multifamily investing, the more I realize that the success of a deal often comes down to what you uncover before closing.

For those with experience, what's one item you never skip during due diligence, even if the property looks great on paper?

Could be:• walking every unit• reviewing leases• inspecting major mechanicals• verifying expenses• talking with the property manager• checking local regulations• something else

Curious what has saved you from making a bad investment—or helped you feel more confident moving forward.

Drew Sygit · Answer

Sewer camera!

Bruce Woodruff · Answer

Yep, Sewer line camera'ed. Every time!

Benjamin Aaker · Answer

@Drew Sygit you beat me to it. Scope the sewer. It's often not done and the source of a large hidden expense later.

Aaron Weikle · Answer

If I had to pick one, it would be verifying the actual expenses vs what the seller reports. I've noticed that deals might look good on paper but then once you start looking at specific costs like utility bills etc., it could all add up quickly. You have to be able to look for these "hidden" expenses more carefully. Inaccurate expenses can lead to a wrong NOI and may cost you overpaying for a deal. Curious to hear what others think!

Vijay Friedman · Answer

@Dalton MongoldOne thing I'd never skip is verifying the actual income and expenses against the rent roll and leases. A property can look great during a walkthrough, but if the financials don't match reality, the deal can change quickly. Everything else flows from knowing the numbers are accurate.

Adam Bartomeo · Answer

I have skipped almost every process throughout the years of buying real estate. It really falls on risk vs reward and if you are fully covered for all possible scenarios by having enough built in equity. The only process that I do not skip is have all of the title work done.

Kyle Snodgrass · Answer

This is like asking which child is your favorite: each one!

But if I had to pick one, walking every unit has provided me with the highest return on time during the DD period. Especially in multifamily, it's imperative that you know what's going on at the property. By walking every unit, you'll get to know each tenant, who's likely to cause trouble, spot mechanical issues, uncover deferred maintenance, plan for capex, and a whole host of other takeaways.

Ideally, you'd do all this with an experienced inspector and your property manager. They're usually trained to notice the little details and can spot problems faster than you can.

What’s One Thing You Never Skip During Due Diligence?

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