Multifamily Due Diligence Checklist

Financial Screening

Verify the headline numbers before investing time in deep analysis.

• Review offering memo or broker package
• Verify asking price and price per unit
• Calculate cap rate using trailing NOI (not proforma)
• Estimate DSCR at current market interest rates
• Check cash-on-cash return at target down payment
• Compare expense ratio to market benchmarks (35-45%)
• Verify rent levels against market comps
• Review current occupancy rate and trend

Market & Location

Understand the macro context before evaluating the property itself.

• Research submarket vacancy rates and trends
• Check new supply pipeline (permits, construction)
• Review population and employment growth trends
• Identify major employers in the area
• Assess neighborhood quality (drive-by or Google Street View)
• Check flood zone status (FEMA maps)
• Research local rent control or tenant protection laws

Financial Documents

Request and verify all actual financial records.

• Obtain trailing 12-month (T12) income/expense statement
• Obtain 2-3 years of historical financials (T24 or T36)
• Obtain current rent roll with lease terms and expiration dates
• Verify actual rent collections vs. scheduled rent (delinquency report)
• Review bank statements to confirm reported income
• Obtain property tax bills (current and prior year)
• Research whether sale triggers property tax reassessment
• Obtain current insurance policy and premium
• Get independent insurance quotes for post-acquisition
• Review all utility bills (12 months) — gas, electric, water, sewer, trash
• Verify which utilities are owner-paid vs. tenant-paid
• Review all service contracts (landscaping, pest, elevator, laundry, etc.)

Physical Inspection

Assess the physical condition and identify capital needs.

• Walk every unit (or representative sample for large properties)
• Inspect roof condition and age (get remaining useful life estimate)
• Inspect HVAC systems — age, condition, maintenance records
• Inspect plumbing — pipe material (copper, galvanized, PEX), water heaters
• Inspect electrical — panel capacity, wiring condition
• Check foundation, structure, and drainage
• Assess parking lot / driveway condition
• Inspect common areas (laundry, pool, gym, hallways)
• Check for pest issues (termites, rodents, bed bugs)
• Assess landscaping and curb appeal
• Order Phase I Environmental Assessment
• Commission property condition assessment (PCA) or building inspection
• Develop capital expenditure budget based on inspection findings

Legal & Compliance

Verify legal standing and regulatory compliance.

• Review all leases (or representative sample)
• Verify zoning compliance and permitted use
• Check for code violations or open permits
• Review title report — easements, liens, encumbrances
• Verify property survey accuracy
• Check for pending or historical litigation
• Review HOA or association documents (if applicable)
• Verify ADA compliance status
• Check lead paint disclosure (pre-1978 buildings)
• Review asbestos survey results (if applicable)

Final Verifications

• Re-verify occupancy and rent roll (ensure no material changes)
• Confirm all tenant security deposits will transfer
• Verify prorations (rent, taxes, insurance, utilities)
• Confirm loan approval and terms
• Review closing statement and all costs
• Set up property management (if changing)
• Transfer or set up new insurance policy
• Transfer or set up new utility accounts
• Prepare tenant notification letters
• Set up bank accounts for property operations
• Create Day 1 operations plan