Thorough due diligence protects against unforeseen risks and validates underwriting assumptions. A systematic approach ensures all critical areas receive appropriate attention.
Key Diligence Areas
- Physical condition: Building systems, deferred maintenance
- Title and survey: Ownership, easements, encumbrances
- Environmental: Phase I and Phase II assessments
- Legal: Lease abstracts, contracts, litigation
Financial Analysis
Rent roll verification, expense analysis, and market rent studies validate income assumptions. Historical financials should be analyzed for trends and anomalies.