Financial Due Diligence?

[Jack Lee]

Can someone explain a little bit about the financial aspect of Due Diligence?

[Bill Gulley]

I have obtained Schedule E pertaining to the property, but IMO it should not be used alone as a verification since you'll never know if that was indeed the schedule that was filed. You can get blank forms by the dozens at the local IRS office!

Occupancy and lease terms can be verified with your estoppel letter, verify occupany with utility records, sellers will usually provide their books on a property. This is a basic audit where you want to match up income and expenses to verify claims made by the seller. If you find utility usage drop but no drop in rents claimed you could have a story teller....