What is your version of "due diligence"

[Ally Kumar]

Would like to learn what is involved in "DD" for vacant or tenant occupied single or multifamily properties. I know its a basic question but are there variations of DD? To what extent experienced investors go in terms of DD? Different DD for single vs multifamily? What resources can one use? I know the basics of DD involve checking property records, permits, flood zone etc. but would like to learn more about DD.

[Jeff B.]

My version is a list of items, which if 'not up to snuff' would be costly and jeopardize the profitability of the REI. Make YOUR list and sort descending to put most expensive at the top. DD then is to exclude each time as a possible risk, or determine the impact of failing the investigation.

eg: 

1. numbers show cash flow;  go/no-go
2. unit properly zoned for my intent;  go/no-go
3. can't get title insurance or clear title; - - punt
4. all encumbrances (2nd, 3rd, liens) understood and declared; go/no-go
5. can I market/rent at FMV and make a profit; go/no-go
6. roofing; $$$
7. foundation; $$$
8. plumbing, including sewer line inspection; $$$
9. heating & cooling equip; $$
10. needs paint, just a one time expense $
11. broken window, awe heck, smallish, one time expense $

go thru the list and PUNT if the pain gets too much(expensive) 

OR make an offer if you can live with it.