Due Diligence Checklist for All Properties
The Numbers:
- What is the yearly ROI of the property? Is it at least 10% excluding appreciation?
- What is the least amount of money that will be accepted as a down payment?
- What is the average house appreciation in the area?
- What is the average market value of similar properties in the area?
- What is the cost per square foot? How does it compare to other properties in the area?
- What is the appraisal value of the property?
- What is the average time needed to sell a property in this area?
- How much would it cost you in realtor fees to sell this property if you needed to?
- How much is property taxes, insurance, and average utilities for this property?
- What would your monthly mortgage payment be?
- What is the vacancy rate in the area?
- How much money is needed for appliances, renovations, etc… in order to effectively rent the property?
- What is a realistic estimate of the number of months per year you can rent this property?
- If this is currently a rental property, how much do the current tenants pay? What is the average rent rate in the area?
- Realistically, how much could you rent the entire property for per month?
The Lumber:
- How old is the property?
- What condition is the roof in?
- Will the furnace or water heater need replaced?
- Is the property insulated to proper standards?
- Does the base of the house slope away from the foundation?
- Are there any cracks in the foundation?
- Does the basement of the house smell musty?
- Are the drainage pips being used and are they in good condition?
- Will the windows need replaced?
- Is the electrical wiring up to date?
- Are there signs of rust, corrosion or scorching around heating unit?
- Has an inspection on the property been completed?
- Is a Real Property Report available?
- Are there any signs of mold in the storage/furnace rooms?
The Land:
- Are there any pending legal issues related to the property? Do you know the litigation history?
- If a phase 1 or phase 2 Environmental Study is available, have your read it over?
- What is the zoning of this lot? Could it be changed to allow for a commercial development or an apartment style unit?
Other:
- What type of tenants will this property attract?
- Is there a property management company that will find and manage tenants for you? What is there success rate and commission fee?
- How motivated is the seller? Are they flexible in price or terms?
- What is the nature of the local economy? – migration, unemployment, average income, interest rates…