This is the list of items you need from the property owner to get the property under contract and then ready for settlement for a conventional deal. This checklist is not for deals where you are using an option, master lease or subject to.
Initial Documents Needed to Get Property Under Contract
- Agreement of Sale –signed by all parties
- If Seller is in foreclosure then include Disclosure Form to Seller in Foreclosure, Disclosure Not Debt Relief Agent
Documents Needed to Conduct Due Diligence
- Rented Properties: Copy of Lease Agreements on all Properties – All Pages
- Copy of rent roll
- List of any tenants who are in arrears on rent or other charges along with the amount
- Correspondence and Legal Notices from any and all tenants or their representatives within past 36 months (if any)
- Agreements affecting the property such as coin op laundry leases, cable service agreements, internet service agreements, advertising agreements.
- Last title policy
- All environmental inspection reports they have related to the property. Refer to these as Phase I or Phase II environmental inspection reports
- All pest, groundwater, well, sewage disposal, septic, roof, plumbing, heating, HVAC, elevator or other inspection reports they have related to the property.
- List of any inspection reports they had but have not given to you along with any information they have as to the provider and the reason they are not turning over the inspection reports.
- Certification that they are giving you all inspection reports, information about missing inspection reports, and tenant information.
Documents and Monies Needed At Settlement
- Assignment of Lease for each lease on the property
- Contact information and payment history for all tenants
- Assignments of any other agreements affecting the property such as coin op laundry leases, cable service agreements, internet service agreements, advertising agreements.
- Letter to each tenant notifying them of new owner and confirming their security deposit and pre-paid rents
- Check for all pre-paid rents (such as last months rent) and security deposits along with a list of the tenants and what they paid
Commercial Investing is very profitable for cash flow investors. Compared to single family real estate investment properties, commercial deals do require more contractual paperwork. Good news is that most commercial real estate brokers and title companies have many of these standard forms and contracts available for real estate investors to complete their real estate deals.