What is Physical Due Diligence? - Multi Family and Apartment Real Estate Investing
With Percy Nikora, Co-Founder
We walk every property before we would put it under contract. We physically visit the property; take a quick tour of the property. It's amazing how many times pictures may look one way, but the property looks another; so it's very important that you visit the property; understand the area, if you're not already familiar with it; understand the dynamics; talk to the team members on site; see what's working, what's not working. So, we do that.
We also generally visit the property with one of our contractors. We take them down just for a quick visual inspection to see if there's something that jumps out at them. One example was there was a particular property we were- we had put an LOI out on. They accepted it. Turned out that there were some foundation issues that were visible to the contractor, and he saw some signs of fixes that were made to the foundations.
We asked the owner about it. They were not very forthcoming with that information, but we- by looking at that a little deeper, we were able to then subsequently follow up and create a- or bring in a specialist on foundations to make that part of our due diligence investigations. Then, we got a good price, saying "Okay, if we buy this property, it's going to cost X to fix the foundations." We tried to take that back to the seller; showed him this independent third-party report. We would either, then, negotiate that into the price, if we still think it's a good deal. Or, in this case, he was-
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