Due Diligence Steps to Consider When Buying a Multi-Family Commercial Property
If you plan on purchasing a multi-family commercial property, you’ll want to be careful to perform every recommended due diligence step before closing on such an important deal. Below are a few of the common due diligence steps that we recommend to our clients during the process. If you have any questions, you are always welcome to call a commercial real estate lawyer in South Florida at Schecter Law for guidance at (954)-779-7009.
Find any units that you can’t immediately rent
If there are renovations that need to be made or other updating requirements for some of the units before they can be rented, you should do your best to identify them and then negotiate a discount for them. A Broward County commercial real estate lawyer can help you negotiate a better deal or include terms in your contract that will adjust your price based on the number of non-rentable units.
Check police reports for the area
You’ll almost certainly want to check recent police reports for the area for crime to help you determine if the property is in an area that you want to purchase. You can also speak to the local police about the area or neighbors to get a better idea. Crime can have a significant impact on the ability for you to rent your units and the future value of your property.
Ask for the rent roll and profit and loss statements
You should also get copies of the leases and rent roll as well as profit and loss statements for the property for the past 3 years. Be sure that you have the rent roll reviewed by an attorney in South Florida who is experienced with commercial real estate to ensure that it is accurate. Profit and loss statements can be used to anticipate your potential revenue for the property.
There are many more due diligence steps
Some of the other due diligence steps that you should perform include getting an environmental survey to find if there are any problems like asbestos or lead paint, warranties from contractors, a maintenance schedule, business license, litigation history, advertising or service contracts, insurance claims history and more.
Performing your due diligence can be time consuming, but it is certainly worth it for any multi-family commercial property that you are seriously considering investing in. Schecter Law has several years of experience assisting our clients with their due diligence prior to investing in multi-family properties in South Florida. For a consultation or to learn more, contact us today at (954)-779-7009.