5 Indispensable Elements of a Due Diligence Checklist for Multifamily Properties

1. Investigate the Urbanness of the Area

Purchasing properties in areas that are slated to become commercial hubs soon is a wise investment step, as renters prefer such locations and they fetch high rates on the market. You should also establish the level and type of activity in the property’s vicinity, as renters will not remain in your property if there is too much traffic or noise. To ensure any such potential scenarios, among others, don’t hurt your investment, inspect the property area in advance.

2. Check for Owners Corporation

The owners corporation is a body of all the owners sharing a mutual responsibility to maintain common areas such as driveways and grounds that fall within the property. If the property you are planning to purchase is subject to an owners corporation, you or your tenants may have limitations on what you can do, with reference to things such as imposing a ban on pet ownership and parking restrictions, among others.

3. Look into Insurance Cover Details

It goes without a saying that you must insure every property that you buy. If the building falls in an area prone to fires and hurricanes, insurance becomes even more imperative to protect your investment and company against various unforeseen perils. Not all insurance companies, however, may be willing to offer cover in the face of such a high and real risk. For those willing to extend cover, the premiums may be very high. You must, therefore, check these elements in advance.

4. Check for Soil and Groundwater Contamination

Many issues such as depletion or contamination of groundwater, may not be evident at the time of purchasing the property and restrict owners from pursuing certain objectives in the future. This problem is possible if the site earlier housed an industry and is now earmarked for residential use.

5. Inspecting the Property

Be it a vacant or occupied unit, inspecting the property-on-mind is as important as any of the above steps. Get all the units’ interiors, exteriors, and common spaces examined to find out areas that require repair and may cast a negative image on prospective tenants. Property inspection is even more important if you are planning to renovate so as to target a particular section of the market.

Article Source: EzineArticles.com

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