Investment Property Due Diligence
We provide a full range of investment property due diligence to our clients that have retained us as a Buyer's Broker.
Residential Leases: We assist investors in reviewing all current leases. We examine the term of the lease and whether free market rents are above or below market rate. We examine rent stabilized leases to make sure increases have been calculated correctly. We can investigate rent controlled leases to investiagte tenant succession.
Commercial Leases: We look closely at the commercial lease riders for clauses regarding base rent, utility expense reimbursement, or special termination clauses.
Purchase Price: We can help investors determine the proper value of a property based on comparables,
replacement cost, and cash flow.
Physical Condition: With the help of our contractor and architect we can provide a top to bottom assessment of the physical condition of a property. This inspection allows an investor to understand the potential cost of maintaining and improving the property. Discovery of physical defects can help investors negotiate a better price with the seller.
Violations: Violations which the seller has not corrected can become the responsibility of the new owner. As part of our due diligence we search all of the city departments responsible for issuing violations. This search reveals violations issued by DOB, DEP, HPD, and other departments which must be corrected at a cost. Discovery of these issues can either force the seller to correct the violations before closing, or help the investor reduce the sale price of the property.
Environmental: We recommend performing a Phase 1 Environmental on most investment properties. Oil tank leaks, asbestos insulation, and other hazardous conditions may exist that will become issues later on. Remediation before closing or a reduction in the sale price benefit the investors we represent.
Litigation: We investigate if there are any pending lawsuits against the property and if this litigation can be resolved before closing.
Mechanics Liens: A company files a Mechanic's Lien on a property when they believe they are still owed money for work performed. We find any unresolved Mechanic's Liens and make sure these will be released on or before closing day.
Management: We investigate the degree to which proper financial records, service contracts, invoices, leases, and required signage and notices have been maintained. This can put the investor in a good negotiating position and can factor into the final sale price.
