Due Diligence Checklist

The Skeletons in the Closet: Why Due Diligence is Non-Negotiable in Real Estate

Let's kick things off with a chuckle:

Why did the real estate investor break up with the haunted house? Because after all his due diligence, he realized it had too many skeletons in the closet!

And that's precisely the point. Real estate isn't a liquid investment. Carrying costs and sales expenses are high, and recovering from a bad decision can take years, even decades. Don't fall victim to hype or unverified third-party information.  Use this "due diligence" to unearth every potential problem and make an informed "go" or "no-go" decision.

Our 20 Years of Hard-Earned Wisdom: Your Due Diligence Checklist

This checklist isn't just theory; it's forged from over 20 years of our own experiences as real estate investors, brokers, and lenders. We've made plenty of costly mistakes – some we're still paying for two decades later. Our goal is to help you avoid those same pitfalls.

We understand that the typical due diligence period is often short, especially in a hot seller's market where buyers are pressured to waive contingencies. That's why we've structured our checklist to help you.

• Sections 1 and 2 are designed for your up-front due diligence. Use these before you even pick a target neighborhood or make an offer.

  
  

• Once you've identified a specific property or are under purchase contract, Section 3 guides you through the detailed scrutiny of that property. We also include specific subsections for condo communities and multi-family properties.

  
  

• Section 4 is essential if you plan to invest with partners.

  
  

Get Your Boots on the Ground and Build Your Team

We've heard too many stories of investors buying out-of-state properties sight unseen, often after a whirlwind, one-day bus tour. Would you marry someone after a single, rushed date? Treat your investments with the same caution.

Before you buy, we strongly recommend building your local team. Interview real estate agents; prioritize those who own rental properties and understand how to "run the numbers."  Talk to property managers and even have them shop with you. Their insights are invaluable.

Avoid Analysis Paralysis: Act Decisively

Yes, this checklist is comprehensive, and we've likely missed a few things that local experts would deem critical. Remember, no property is perfect. The key is to decide what's truly critical for you, understand the inherent risks and rewards, and then pull the trigger when you find a property that is “good enough.” It's time to put your money to work!

Download our Due Diligence Checklist for Residential Rental Property

Due-Diligence-Checklist-r01.pdf

Download PDF • 574KB

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