What buyers review
Multifamily due diligence usually covers several workstreams at once:
- Financial: rent roll, T-12 and prior-year statements, bank deposits, utility bills, tax bills and service contracts.
- Leases and tenants: a sample or full lease audit, deposit records, delinquency reports and tenant estoppel certificates.
- Physical: inspections of roofs, mechanical systems, plumbing, electrical and units, often with a property condition report.
- Environmental: commonly a Phase I environmental site assessment, which lenders usually require.
- Legal and title: title commitment, survey, zoning compliance, permits, code violations and any litigation.
- Insurance: loss history and quotes for the buyer’s coverage.
Typical timelines
Diligence periods for apartment buildings commonly run from a few weeks to about two months, set in the purchase agreement. Buyers using agency or bank financing often need additional time for appraisals and loan approval. During this window, the buyer can usually cancel and recover its deposit; afterward, the deposit typically becomes non-refundable.
Sellers who deliver documents quickly and completely help keep the timeline on track. Delays in providing information are one of the most common reasons diligence is extended.
Common issues that change deals
Diligence findings typically lead to one of three outcomes: the deal proceeds, the price or terms are adjusted, or the buyer walks away. The usual causes are:
- Income that does not match the rent roll or bank deposits.
- Deferred maintenance or failing systems discovered on inspection.
- Unpermitted units or work and open code cases.
- Expense surprises such as a property tax reassessment or insurance increase.
- Title problems, easements or survey issues.
How sellers can prepare
Gather the documents buyers ask for before you go to market: a current rent roll, T-12, leases, tax bills, utility bills, service contracts, permits and any inspection reports you already have. Address small, visible issues and disclose known larger ones early, when they can be priced, rather than letting a buyer find them late. A buyer who has confidence in the information is far less likely to retrade.
Our printable seller document checklist lists what to gather.
