Hello, this is Shuo. You can say due diligence is the syndicator’s responsibility. However, as passive investors, we should still have the conversation and learn how it’s being done.
There’s a contingency period within which the buyer has the opportunity to perform due diligence and if deficiencies are found, the buyer can either retreat or request the seller to fix the issue.
The process typically includes interior inspection, so walking through and checking the condition of every single unit and also inspecting the structural components of each building and common area. Also, auditing the lease file and maintenance record, visiting the property multiple times is recommended especially at night times; interviewing staff, and conducting a crime study. Also, many syndicators hire third parties to conduct the due diligence
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Patrick Grimes
Patrick Grimes is a design engineer and CEO and Founder of Invest on Main Street, LLC. His real estate holdings include general partner ownership of a multifamily and single-family real estate portfolio valued over $146M, including 1,950+ units across the southeastern United States and Texas.
He has been active in real estate investment since 2007, including purchasing land and distressed assets, renovating them, and stabilizing them for long-term cash flow. To scale his real estate portfolio, Patrick moved from single-family to multifamily investing and founded Invest on Main Street, a private equity firm specializing in multifamily value-add projects in emerging markets.