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Multifamily Due Diligence Checklist

By Bill Ham, Founder & Author – Creative Cash & Real Estate Raw

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.