Give Due Diligence Its Due

Are you planning to invest in development or income producing real estate?

You've found an appealing property to acquire. Perhaps you've made an offer and are starting to work with a real estate attorney to negotiate the contract. Before a contract is signed or during a contractual due diligence period, a savvy buyer will conduct thorough due diligence to verify the facts presented about the opportunity, calculate the value and identify the risks of the opportunity.

Some typical areas of focus during due diligence...



Whether purchasing a co-op, condo, townhouse, or multi-unit investment property, due diligence should be an integral part of the purchase process.   Some typical areas of due diligence include

→ Building & Property Condition:  Identify repairs, improvements, and upgrades that might be necessary in the near future.
TIP: Engage a professional inspector to conduct an engineering inspection.   When major renovations are planned, consult an architect or a general contractor as well to get a clear picture of costs.
TIP: If purchasing an individual unit, check the general condition and upkeep of the building.  The quality of maintenance may be an indicator for assessments or charges.

→ Financial Health: Verify building financial statements, schedule of improvements & budgets.
TIP: Obtain prior year tax returns to compare with reported financial figures.  Check multiple years to identify patterns of decline or improvement in the building's health. 

→ Neighborhood Survey: Review zoning laws, inquire to known plans for neighboring properties and check local government records.
TIP: Tap into online data sources to search NYC records for liens, violations, tax records and more.  Check with the local community board for application and submissions.

The bottom line: Due diligence is a crucial part of each real estate transaction. Know the key steps of due diligence allows you to focus on the specifics of each opportunity.