This is a checklist to follow when doing due diligence on a multifamily asset. This is especially important if you are using any form of creative financing for multifamily like seller financing or a master lease option. Have an attorney in your market review this list before using it. Laws change from state to state and can vary greatly when using creative financing for multifamily.
Obtain complete copies of the following documents, to the extent such documents are which are in Seller’s or Seller’s property manager’s possession or reasonable control:
- Current rent roll and access to all Tenant files (on site) and all Leases, and copies of all laundry leases and other commercial leases
- All existing ALTA Surveys, Seller’s existing Title Policy and underlying documents
- Lease activity report for the past 60 days
- Property brochure including property logo, floor plans and site plan
- List of personal property inventory
- Property tax bills for the period of Seller’s ownership
- Capital expenditure summary and list of site improvements for the period of Seller’s ownership.
- Standard lease agreement and addenda forms
- Copies of all service contracts and a vendor summary
- Copies of all existing permits, certificates, and licenses
- Utility provider list, including all current providers, and utility invoices and billing information for the period of Seller’s ownership.
- All Phase I Environmental Reports and any other environmental reports or studies regarding the Property
- Year-to-date statement of income and expenses for the latest month available and for the period of Seller’s ownership
- Most current engineering reports and any third-party reports regarding the condition of the Property, including without limitation, soils reports, structural reports, roof reports, HVAC reports, structural calculations and seismic reports, parking lot reports, pest control/termite reports, including inspection reports and treatment reports, engineering reports, ADA compliance surveys, fire sprinkler reports, elevator reports and similar reports or studies with respect to the Property;
- As built plans and specifications relating to the original development for the Property, renovation, and any major capital repairs.
- Maintenance records for the period of Seller’s ownership, including year-to-date, and maintenance requests/log, including past 12 months work order history by unit number, completion dates and all pending maintenance requests.
- Copies of any notices of violations of any federal, state, municipal or other health, fire, building, zoning, safety, environmental protection or other applicable codes, laws, rules, regulations, or ordinances relating or applying to the Property
- Insurance loss runs for the period of Seller’s ownership; (including _______ year-to-date)
- An operational budget, including revenue projections for the Property for calendar year _________.
- Monthly profit and loss statements for the period of Seller’s ownership; through the Effective Date; _________.
- A schedule of all pending or threatened litigation or governmental proceedings or enforcement actions relating to or affecting the leases or the Property and known to Seller.
- All warranties, guaranties and indemnities made by or received from any third party with respect to any part of the Property and known to Seller.
- The most current zoning report for the Property.
For more information like this check out my blog at www.realestateraw.com and join my Facebook group Real Estate Raw for Multifamily Investors.
Best of luck!
Bill Ham
