Due Diligence Checklist for Investment Properties

Due diligence is the investigation period between contract acceptance and closing. It's your opportunity to verify every assumption that went into your offer. Cutting corners here is the fastest path to a losing deal.

Property verification includes confirming the legal description matches the physical property, verifying square footage against tax records (discrepancies are common), checking lot boundaries with a survey if there are any encroachment concerns, verifying bedroom and bathroom counts (some rooms may not meet code requirements), and reviewing the property's permit history for unpermitted additions or modifications.

Financial analysis requires pulling actual comparable sales and refining your ARV estimate, getting detailed contractor bids (not just estimates), calculating all holding costs for the projected timeline, verifying the property tax amount and assessment, and confirming insurance costs for the renovation period.

Title and legal review means ordering a preliminary title report, checking for liens (tax liens, mechanic's liens, HOA liens), verifying there are no pending legal actions against the property, confirming the seller has authority to sell, and reviewing HOA documents (if applicable) for restrictions on renovations.

Physical inspection covers a general home inspection, roof inspection (condition and remaining life), foundation inspection (if any concerns are noted), sewer scope (especially for properties built before 1980), environmental testing (lead, asbestos, mold, radon) as warranted by age and condition, and pest inspection for termites and other wood-destroying organisms.

Municipal checks include verifying zoning compliance for your intended use, checking for open code violations, confirming utility availability and condition (especially sewer vs. septic), reviewing flood zone designation, and understanding any planned infrastructure changes that could affect value.

Create a standardized checklist and use it for every deal. The properties that seem perfect are the ones where you're most tempted to skip due diligence — and they're exactly the ones that bite you.