Real Estate Due Diligence Playbook

Conducting your due diligence before you buy is crucial to your success as an investor. Our real estate diligence playbook will help you thoroughly investigate all the information to ensure that you fully understand what is involved with the property you’re buying.

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What Tasks does the 

Real Estate Due Diligence Playbook

 Include

Property Information

  • Review mechanical reports (HVAC, electric, structural)
  • Review all inspection reports (roofing, HVAC, foundation, septic)
  • Review environmental reports (soils tests, radon, mold, lead paint and asbestos)
  • Review geotechnical soils reports and documents
  • Review seismic risk assessment (probable maximum loss) reports
  • Review plans, specifications, and other documents detailing the property's "as build" condition
  • Order Property Condition Assesment
  • Order current Phase I Environmental Site Assessment
  • Order current Additional Site Investigation (Phase II)
  • Obtain certification or studies confirming the property's square footage
  • Obtain reports certifying compliance with Americans with Disabilities Act (ADA) requirements
  • Review building warranties and guarantees
  • Review certificates of occupancies, licences, and building permits
  • Receive copies of insurances (liability, casualty, etc.)
  • Review energy usage reports in conjunction with energy expenses
  • Review matienence schedules for property and property equipment

Operational Information

  • Obtain a list of positions, employees, wages, and benefits
  • Review history of labor or strikes, verify no current labor disputes
  • Verify no disputes with brokers, suppliers or employees

Survey, Title, and Zoning

  • Appoint a title company
  • Forward appointed company the seller's title commitment and other respective documents
  • Order current title commitment, ALTA survey and other respective documents
  • Review most recent title and/or boundary survey
  • Obtain zoning reports
  • Confirm all leases and entitlements are in the seller's name
  • Review covenants, restrictions, and easements

Tenancy

  • Obtain current rent roll
  • Review reports detailing current and historic vacancy rates
  • Obtain a copy of all leases containing all associated exhibits and attachments and amendments, including guarantees and subleases
  • Review tenant files (lease, correspondence, etc.)
  • Resolve any standing tenant issues
  • Obtain copies of LOCs
  • Review security deposit information and reconciliation
  • Review tenant credit quality and payment history reports
  • Review cost pools for overcharges to tenants
  • Review leases and highlight contractual landlord obligations to tenants
  • Prepare and distribute Tenant Estoppel Letters
  • Receive and review all distributed Tenant Estoppel Letters
  • Tenant interviews

Legal, Contracts, and Insurance

  • Review historic and pending litigations
  • Review and transfer trademarks, brochures and websites to the buyer
  • Review current insurance policies in effect on the property
  • Obtain an insurance quote from Risk Management

Financial Information

  • Review income and expense statements from the past three years
  • Review audited financial statements from the past three years
  • Review and compare actual vs budgeted operating and capital expenses
  • Analyze 5-year capital expenditure history
  • Review utility bills from the past three years
  • Review tax documents, including real estate taxes from the past three years
  • Compare realized expenses to the appropriate building data
  • Obtain a list of all unfunded capital projects in process
  • Review capital improvements and improvement plans
  • Obtain current General Ledgers
  • Obtain tenant recovery schedule
  • Analyze 5-year leasing cost information
  • Review 24-month aged receivables

Governmental

  • Research, obtain and verify all necessary licenses and/or permits
  • Verify the property’s compliance with governmental and environmental regulations
  • Verify no governmental plans or administrative proceedings that may affect the property
  • Verify no existing contemplated assessments

FAQ

What Is Due Diligence?

Due diligence is a critical aspect of any deal that begins very early in the process and can continue right up until closing. During due diligence, the potential buyer asks questions and requests documentation from the seller that helps the buyer understand the target company and its business. These requests are usually general to start and become more specific as the buyer develops a greater understanding of the target. Buyers use the information provided by the seller to evaluate the opportunities and risks associated with the potential transaction. It is important for sellers to stay organized throughout the process. Buyers often submit thorough, detailed request lists that require input from numerous members of the seller’s deal team.

What is a due diligence checklist?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

What Questions Does the Master Due Diligence Questionnaire Include?

As the name implies, a due diligence request list is a list of questions and requests for information and documentation that a buyer submits to a seller in order to learn about the target company, its business and its operations. The initial diligence request list tends to be broad and typically includes an extensive list of questions covering a wide range of subjects. This allows the buyer to gain a broad understanding of the target company and identify key issues that can be investigated and considered more closely. Because every deal is different, due diligence request lists have to be tailored to meet the needs of the buyer and address the unique circumstances of your transaction.
However, there is a variety of fundamental requests that are relevant in most deals. These are the types of requests that our templates are designed to address.

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

  • Start 14-day Free Trial of DealRoom and sign-up
  • Select a Master Due Diligence Template while creating a new room
  • Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Can I change requests in this checklist or add new?

Every M&A process is different. Downloaders are urged to make these checklists their own by changing the providing information to better fit their needs.

Does this questionnaire provide all the necessary integration information?

This checklist was created by and for M&A professionals. It includes a comprehensive starting point for the integration process. However, every deal is different and may require additional requirements and tasks.

How to use this template with DealRoom?

  • Start 14-day Free Trial of DealRoom and sign-up
  • Select an Integration Template while creating a new workspace
  • Start planning, assigning, adding to, and completing integration tasks. The Requests tab is automatically populated with the tasks from the integration template.

Key considerations when using our m&a due diligence template

Our templates are drafted to provide an inclusive and wide-ranging list of initial due diligence requests. However, the templates, as well as the information contained therein, are not legal advice. They are not complete, and they are not specific to your transaction. The templates are designed to elicit general information from the seller that will provide the buyer with a broad overview of the target and it’s business and operations. You should review any template before using it, and it may need to be modified to ensure that it is suitable and relevant to your circumstances. Information provided by the seller will likely trigger additional questions that focus on specific aspects of the target’s business and issues identified during the due diligence process.

Are the requests in the template comprehensive?

No. Our Due Diligence Checklist is drafted to include typical requests that are relevant in most transactions. However, every deal and every target company is unique. Before utilizing any template, it is important that you review it with the help of your legal and other professional advisors to ensure that the requests are complete and tailored to the specific circumstances of your deal.

How to use the template with Dealroom

  • Start 14-day Free Trial of DealRoom and sign-up
  • Select a Master Due Diligence Template while creating a new room
  • Start assigning, adding to, and completing due diligence requests with needed documents by uploading them into the built-in virtual data room. The Requests tab is automatically populated with the requests from the due diligence template.

Real Estate Due Diligence Playbook

Conducting your due diligence before you buy is crucial to your success as an investor. Our real estate diligence playbook will help you thoroughly investigate all the information to ensure that you fully understand what is involved with the property you’re buying.

Real Estate Due Diligence Playbook

Conducting your due diligence before you buy is crucial to your success as an investor. Our real estate diligence playbook will help you thoroughly investigate all the information to ensure that you fully understand what is involved with the property you’re buying.

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  • Review mechanical reports (HVAC, electric, structural)
  • Review all inspection reports (roofing, HVAC, foundation, septic)
  • Review environmental reports (soils tests, radon, mold, lead paint and asbestos)
  • Review geotechnical soils reports and documents
  • Review seismic risk assessment (probable maximum loss) reports
  • Review plans, specifications, and other documents detailing the property's "as build" condition
  • Order Property Condition Assesment
  • Order current Phase I Environmental Site Assessment
  • Order current Additional Site Investigation (Phase II)
  • Obtain certification or studies confirming the property's square footage
  • Obtain reports certifying compliance with Americans with Disabilities Act (ADA) requirements
  • Review building warranties and guarantees
  • Review certificates of occupancies, licences, and building permits
  • Receive copies of insurances (liability, casualty, etc.)
  • Review energy usage reports in conjunction with energy expenses
  • Review matienence schedules for property and property equipment
  • Obtain a list of positions, employees, wages, and benefits
  • Review history of labor or strikes, verify no current labor disputes
  • Verify no disputes with brokers, suppliers or employees
  • Appoint a title company
  • Forward appointed company the seller's title commitment and other respective documents
  • Order current title commitment, ALTA survey and other respective documents
  • Review most recent title and/or boundary survey
  • Obtain zoning reports
  • Confirm all leases and entitlements are in the seller's name
  • Review covenants, restrictions, and easements
  • Obtain current rent roll
  • Review reports detailing current and historic vacancy rates
  • Obtain a copy of all leases containing all associated exhibits and attachments and amendments, including guarantees and subleases
  • Review tenant files (lease, correspondence, etc.)
  • Resolve any standing tenant issues
  • Obtain copies of LOCs
  • Review security deposit information and reconciliation
  • Review tenant credit quality and payment history reports
  • Review cost pools for overcharges to tenants
  • Review leases and highlight contractual landlord obligations to tenants
  • Prepare and distribute Tenant Estoppel Letters
  • Receive and review all distributed Tenant Estoppel Letters
  • Tenant interviews
  • Review historic and pending litigations
  • Review and transfer trademarks, brochures and websites to the buyer
  • Review current insurance policies in effect on the property
  • Obtain an insurance quote from Risk Management
  • Review income and expense statements from the past three years
  • Review audited financial statements from the past three years
  • Review and compare actual vs budgeted operating and capital expenses
  • Analyze 5-year capital expenditure history
  • Review utility bills from the past three years
  • Review tax documents, including real estate taxes from the past three years
  • Compare realized expenses to the appropriate building data
  • Obtain a list of all unfunded capital projects in process
  • Review capital improvements and improvement plans
  • Obtain current General Ledgers
  • Obtain tenant recovery schedule
  • Analyze 5-year leasing cost information
  • Review 24-month aged receivables
  • Research, obtain and verify all necessary licenses and/or permits
  • Verify the property’s compliance with governmental and environmental regulations
  • Verify no governmental plans or administrative proceedings that may affect the property
  • Verify no existing contemplated assessments

Prepare for your due diligence

DealRoom’s real estate due diligence template is designed to help teams have an efficient due diligence process from the beginning. By providing your team with a pre-made professional diligence checklist, you can get a jump start on fulfilling diligence requests.

The template can act as a guide for common diligence requests categories such as property information, operational information, survey, title, and zoning, tenancy, financial information, governmental and more. And when you use a diligence tracker inside DealRoom, everything will be in one centralized space.

Property Information

  • Review mechanical reports (HVAC, electric, structural)
  • Review all inspection reports (roofing, HVAC, foundation, septic)
  • Review environmental reports (soils tests, radon, mold, lead paint and asbestos)
  • Review geotechnical soils reports and documents
  • Review seismic risk assessment (probable maximum loss) reports
  • Review plans, specifications, and other documents detailing the property's "as build" condition
  • Order Property Condition Assesment
  • Order current Phase I Environmental Site Assessment
  • Order current Additional Site Investigation (Phase II)
  • Obtain certification or studies confirming the property's square footage
  • Obtain reports certifying compliance with Americans with Disabilities Act (ADA) requirements
  • Review building warranties and guarantees
  • Review certificates of occupancies, licences, and building permits
  • Receive copies of insurances (liability, casualty, etc.)
  • Review energy usage reports in conjunction with energy expenses
  • Review matienence schedules for property and property equipment

Operational Information

  • Obtain a list of positions, employees, wages, and benefits
  • Review history of labor or strikes, verify no current labor disputes
  • Verify no disputes with brokers, suppliers or employees

Survey, Title, and Zoning

  • Appoint a title company
  • Forward appointed company the seller's title commitment and other respective documents
  • Order current title commitment, ALTA survey and other respective documents
  • Review most recent title and/or boundary survey
  • Obtain zoning reports
  • Confirm all leases and entitlements are in the seller's name
  • Review covenants, restrictions, and easements

Tenancy

  • Obtain current rent roll
  • Review reports detailing current and historic vacancy rates
  • Obtain a copy of all leases containing all associated exhibits and attachments and amendments, including guarantees and subleases
  • Review tenant files (lease, correspondence, etc.)
  • Resolve any standing tenant issues
  • Obtain copies of LOCs
  • Review security deposit information and reconciliation
  • Review tenant credit quality and payment history reports
  • Review cost pools for overcharges to tenants
  • Review leases and highlight contractual landlord obligations to tenants
  • Prepare and distribute Tenant Estoppel Letters
  • Receive and review all distributed Tenant Estoppel Letters
  • Tenant interviews

Legal, Contracts, and Insurance

  • Review historic and pending litigations
  • Review and transfer trademarks, brochures and websites to the buyer
  • Review current insurance policies in effect on the property
  • Obtain an insurance quote from Risk Management

Financial Information

  • Review income and expense statements from the past three years
  • Review audited financial statements from the past three years
  • Review and compare actual vs budgeted operating and capital expenses
  • Analyze 5-year capital expenditure history
  • Review utility bills from the past three years
  • Review tax documents, including real estate taxes from the past three years
  • Compare realized expenses to the appropriate building data
  • Obtain a list of all unfunded capital projects in process
  • Review capital improvements and improvement plans
  • Obtain current General Ledgers
  • Obtain tenant recovery schedule
  • Analyze 5-year leasing cost information
  • Review 24-month aged receivables

Governmental

  • Research, obtain and verify all necessary licenses and/or permits
  • Verify the property’s compliance with governmental and environmental regulations
  • Verify no governmental plans or administrative proceedings that may affect the property
  • Verify no existing contemplated assessments

How DealRoom can help you execute due diligence

By using our master due diligence template, alongside DealRoom’s M&A lifecycle management software, you can create a smooth diligence process.

How DealRoom can help you execute integration

By using our integration template, alongside DealRoom's M&A lifecycle management software, you can create a smooth integration process

With this solution you’ll receive:

Professional template

with requests that are specific to your transaction type. Our platform allows you to add new requests as they pop up, track progress, collaborate and more.

A built-in data room

allowing you to link corresponding documents to the diligence requests and keep all the information safe.

Project management capabilities

that enable your team, client and other parties to work together and set priorities during the diligence.

Collaboration tools

to eliminate long email threads. Team members can add comments and tag other each other on requests.

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