Due Diligence Checklist for Property Buyers
When purchasing a multifamily or commercial property, conducting due diligence with the seller is essential. Here’s a checklist of documents and inquiries to make sure you have all the necessary information. Remember, each transaction may require additional documents or focus areas depending on specific property circumstances.
Rent Rolls: At least 6 months of rent rolls to assess rent consistency and occupancy.
Profit and Loss Statements: At least the last 2 years to review financial performance.
Income and Expense Statements: To understand the property’s cash flow and identify trends.
Lease Agreements: Copies of current lease agreements with each tenant.
Tenant Estoppel Certificates: Signed forms from tenants verifying lease details (can be sourced from ZIP Forms).
Notice Records: Copies of any 3, 30, or 60-day notices served to tenants.
List of Major Repairs: Documentation of repairs made within the last year.
Vendor Information: Contact details of maintenance vendors (handyman, contractors, electricians, etc.).
Housing Authority Papers: Relevant paperwork if there is any government involvement or assistance with the property.
Violation Notices: Any notices from the city, code enforcement, or police.
Important Facts from Seller or Management: Information from the seller or management company about any unique aspects of the property.
Record of Break-ins: Any reported break-ins within the past year.
Tenant Lawsuits: Documentation of any lawsuits from tenants against the owner or management.
Legal Notices: Copies of any notices served by attorneys in the past.
Eviction Status: Information on any pending eviction cases.
Pest Control Records: Any history of pest issues, including treatment details.
Bedbug Incidents: Documentation of any bedbug treatments.
Mold Reports: Any known mold problems and treatments.
Termite Reports: Information on termite inspections or treatments.
Roof Age: Estimated age of the roof.
Last Remodeling Date: Records of the last major property remodeling.
Flooring Replacement: When the flooring was last changed.
Roof Leaks: Information on any known roof leaks.
Plumbing Issues: Any known plumbing concerns or repairs.
Electrical Issues: Any known electrical issues or repairs.
Tenant Security Deposits: All security deposits paid by tenants must be transferred to the new buyer through escrow.
This checklist provides a starting point for buyer due diligence. It’s essential for buyers to verify all documents, ask additional questions if needed, and involve legal and financial professionals to ensure all aspects of the property are thoroughly examined.
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