DUE DILIGENCE CHECKLIST - Posted by Ken Anderson

Posted by Doralyn Bigelow on May 12, 2010 at 07:14:13:

I love your checklist.

Could you create a tweaked list for a carwash (Newton, Iowa)…here is the link: http://www.businessmart.com/business-for-sale/bid/68507/automatic-car-wash-jasper-county-iowa. Maybe the ratios are not acceptable for a successful go. Please advise.

Need/want to be very careful before I meet with the broker.

Also, this is our first time investing in anything. LOL How can I be prepared (Iowa) for this meeting. Financing will have to happen…Does your company assist with this kind of thing?



DUE DILIGENCE CHECKLIST - Posted by Ken Anderson

Posted by Ken Anderson on October 11, 2003 at 09:22:59:


Are you comfortable with the due diligence checklist you posted in your article? (I have left out Y2K compliance stuff).

I would love an updated comprehensive checklist! hank0-you very much for your attention.

Preliminary due diligence checklist:

· Financial records:
· Annual profit and loss statements (P&Ls) past 3 years minimum (5 years preferred)
· At least one year monthly P&Ls (preferably two years)
· Balance sheet (3 years)
· Rent Roll including term, deposit, and payment history
· Tax returns- 3 years

· Insurance: Insurance Policy; including all riders, risk assessments, and disclosure affidavit for carrier

· All Existing Loan Documents: including notes, deeds of trust, closing statements, title policy, rate riders, etc., and contact names and numbers.

· Deed

· All Leases: entire copies plus any addendum or riders.

· Any service or advertising contracts: (Trash, extermination, maintenance, management, commission agreements, union agreements, vending, billboard, pay telephone, etc. and any instrument or contract to be assumed by Purchaser)

· Copies of all recent appraisals, engineering reports, environmental reports

· Survey (as-built), legal description, architectural and engineering plans and specifications

· Payroll register: List of employees including name, position, wage rate, and entitled benefits

· Business license

· Physical inventory of furniture, fixtures, and equipment, and supplies.

· Utility bills: Water, Sewer, Gas, Electric (at least two years of monthly statements) (or recap report from provider showing usage and cost)

· Bank statements showing deposits for last twelve months (optional)

· Phone system documents

· Computer systems

· Fire System inspection reports

· Property Tax tickets for the past three years (real estate and personal)

· Litigation History: details of any past or pending litigation (if none, then affidavit from owner)
Comprehensive due diligence: pre-closing

· Engineering Inspection and Survey

· Environmental Inspection and Survey: Key Issues: Asbestos, Lead Paint, underground tanks, wetlands

· Environmental Phase One: An Environmental Phase One (1) Assessment is an inquiry conducted to determine the environmental status of a property or facility in connection with a real estate property transaction. It follows standards which includes those published by ASTM.

· Environmental Phase Two: Assessments/Subsurface Investigations: These projects include but are not limited to subsurface drilling and sampling, monitoring well installation and sampling, ground penetrating radar, and asbestos and lead sampling.

· LUST survey- leaking underground storage tanks

· Financial Audit

· Title Search and policy

· Property tax verification

· Tenant Estoppel Letters

· Mortgagee Estoppel letters

· Legal Verifications: licenses, permits, zoning

Re: DUE DILIGENCE CHECKLIST - Posted by ray@lcorn

Posted by ray@lcorn on October 12, 2003 at 15:45:03:


Am I comfortable with this list? Yes, as a general guide to performing the investigations needed to establish the facts in an income property as it was intended.

I have developed several checklists that are specific to certain property types. Hopefully in the very near future I’ll have an updated due diligence article to post here on CRE Online. Be sure to sign up for the Insider’s Club to get first notice of new articles as they are written.