Buying a new business or real estate property can be exciting. It can also be risky if you aren’t cautious before making the purchase. If you’re looking at acquiring new real estate property, you’ll want to do your due diligence.
Due diligence is a thorough research process that helps a buyer know as much as possible about a property before the sale agreement it signed. It benefits you, the buyer, in that it allows you to uncover any unwanted surprises before the purchase.
As part of the due diligence process, you’ll want to consider these steps:
Inspect the building
There are many systems that get a building to run, and before your purchase, you’ll want to scrupulously inspect each one. This may mean hiring a team of individual experts to check them out and ensure they comply with local building codes as well as function correctly.
Collect tenant information
Whether you’re purchasing an apartment building or commercial real estate, collecting information on tenants is a must. Be sure to carefully review lease information, including rent, security deposits and lease dates. This can seem tedious, but hidden information can damage the appeal of a deal if it’s not discovered immediately.
Request a municipal search
While you’re running background checks on the building, you’ll want to request a municipal search. A municipal search helps ensure that a buyer will not be taking on any unwanted additional charges with the new purchase. It can uncover expired permits, unpaid utility bills or property taxes and code violations and liens.
Due diligence can seem like a tedious process, and it may be tempting to cut corners to save time and money. However, this could cost you more money in the future if there are hidden surprises lurking in the purchase. Staying vigilant during due diligence can help you in the long run.