Download Real Estate - Due Diligence Checklist

Contents: Fourteen (14) pages covering over 220 questions
Format: MS Word, and PDF
Distribution: Immediate Electronic Download

Real Estate Due Diligence Checklist

These requested items assist the buyer to quickly identify potential issues of concern with a property.

Gathering Necessary Documents: Preliminary Due Diligence

Contracts, Licenses, and Policies:
1. All leases (full copy) including all associated addendums or riders
2. All existing loan documents including: notes, deeds of trust, closing statements, title policy, rate riders, and contact names and numbers.
3. Deed
4. Any service or advertising contracts including: billboard agreements, cable television agreements, commission agreements, extermination agreements, maintenance agreements, management agreements, pay telephone agreements, union agreements, and vending agreements - any instrument or contract to be assumed by the purchaser.
5. Insurance policy including all riders, risk assessments, and disclosure affidavit for carrier.
6. Business license
Financial:
1. Bank statements showing deposits for the last 12 months
2. Annual profit and loss statements (P&Ls) for past 3 years minimum or 5 years (preferred)
3. At least one year of monthly P&Ls or 2 years of P&Ls (preferred)
4. Balance sheet for past 3 years
5. Rent Roll including term, deposit, and payment history.
6. Tax returns for past 3 years
7. Utility bills for last 2 years of monthly statements including: water, sewer, electric - or recap report from provider showing usage and costs.
Other
1. Copies of all recent appraisals, engineering reports, and environmental reports.
2. Survey (as-built), legal description, architectural and engineering plans and specifications.
3. Payroll register list of employees including: name, position, wage rate, years of service, and entitled benefits.
4. Physical inventory of furniture, fixtures, equipment, and supplies.
5. Phone system documents including y2k compliance letters (if necessary)
6. Computer systems including y2k compliance letters (if necessary)
7. Fire system inspection reports including y2k compliance letters (if necessary)
8. Property tax tickets for past 3 years - both real estate and personal
9. Litigation history including details of any past or pending litigation - if none exist an affidavit from owner.

Buying Vacant Land

What is the current zoning?
What is the current Official (or Master) Plan designation?
What types of uses are the adjacent lands being put to?
What is the local economic environment like and what direction is the neighborhood heading - economically speaking?
What is the crime rate like in the vicinity including petty crime such as vandalism and graffiti?
How can you add value to this piece of real estate?
1. What types of uses are most in demand?
What is the competition like?
Are other developers doing projects in the area?
1. How are they doing these projects?
2. Is it possible that competition in the area could actually boost your proposed uses much as fast food restaurants or petrol stations conglomerate together and feed off each other (so to speak)?
What kind of support are the neighbors likely going to give you for your proposed uses?
1. Have you talked to any of the neighbors?
What does your local councilor think of your project?
Have you walked the site and photographed it?
Is the local infrastructure sufficient to support your project (storm water outlet, sewer capacity, piped water supply, road capacity, power)?
Are high speed Internet, cable, and telephone service available?
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