Question about "due dilligence" on apartment building purchase

[Brian Fournier]

Hi Everyone,

I am in the process of making an offer on a 12-unit apartment building.  I have owned smaller rentals but this is my first "commercial" sized acquisition.  My question is about the "due diligence" period between the acceptance of offer and the closing.  Other than inspecting the physical condition of the property itself, what other things should I be looking into?  Also, how much information about the current tenants should I expect to get from the seller at this point in the negotiations?

Thanks!

[Jeff Greenberg]

@Brian Fournier I expect to see the T12 and the current RR prior to making any offer.

"I have walked the property inside and out and have seen two of the units with the expectation that I will see all of them before closing."

This is a little confusing. My idea of "inside and out" would be all of the units. Prior to going under contract I would not expect to be able to see the inside of any occupied units.  After the contract is signed, that is an requirement during the DD phase.  In addition to @Andrew Johnson comment, make sure all leases are for the amount on the rent roll, and confirm all security deposits.  Look for anything unusual on the leases, like very long leases at under market prices for the sellers maintenance man/cousin. Remember all leases will be assigned to you and are enforceable under the law. This could include laundry and cable.  Read contracts.

LOI is letter of intent in this context. It is how you present the offer. Once accepted, then you can go to contract(purchase and sale agreement)