Jumpstart your due diligence inspections and provide more accurate information to potential owners with this must-have checklist for multifamily property acquisitions.
Step 1. Practice Makes Due Diligence Perfect
This isn’t an average real estate walkthrough. With only a day, or maybe two, to complete your onsite inspection of what can be hundreds or thousands of units, your team must be ready, smart, quick, and nondisruptive. Therefore, you should schedule a preparation and practice meeting with your onsite team.
Resolving problems onsite will be critical to your success once the walk starts, and this kind of practice helps. In this meeting you should:
- Make sure everyone understands when to arrive, where to meet, what to wear, when to break for lunch, and how to use inspection and lease auditing software.
- Explain how they should communicate with your onsite acquisitions manager or remote management team during a walk if questions arise.
- Pre-load software onto tablets or other mobile devices. Ask each team member to log in and test the software to ensure there are no delays when the big day arrives.
- Role-play specific scenarios, such as how to handle a resident objecting to a team member entering their unit.
Step 2. Eliminate Friction Points Using Inspection and Lease Audit Technology
Remember, your team only has a small window to gather the property information needed. There is no time for paper-based processes or clunky inspection software. You need due diligence technology that’s easy to use, so inspectors can get in and out of units quickly. This technology should include:
- A user interface that enables your team: Inspection templates, clear and legible fonts, and color schemes based on visual accessibility are critical. Also, users should be able to auto-select multiple items easily and apply ratings in bulk. These features go a long way towards speeding up those micro-moments that, over hundreds of units, can save a significant amount of time.
- Editing for easy self-service. If something onsite is different from what is expected, inspectors should be able to update the templates themselves.
- A reliable offline mode. It’s important to ensure all data is captured and synced back to your master data set, even when internet connectivity is limited.
“Prior to using HappyCo technology for our due diligence walks, it was taking our teams, on average, 5 minutes to inspect a single unit and it required two people. Now, we only need one person, and it takes, on average, just 45 to 90 seconds per inspection. So, the time savings is phenomenal, which is really critical when it comes to acquisitions.”
Senior Manager of Technical Services Harbor Group Management
Step 3. Track Progress in Real-Time
Engaging with your team early and often is the best way to ensure things are proceeding smoothly. Are units being inspected quickly enough? Are lease audits happening at the necessary pace? Typically, onsite inspectors have a target number of units that they need to enter before leaving for the day, so make sure to:
- Check in with your team. You can use a proven manual process or software designed to automatically update remote or onsite managers with the status of all inspections and lease audits while they’re happening.
- Communicate with your corporate acquisitions team immediately if it appears that the inspection is going to take a half a day or a day longer, so they can coordinate directly with the property.
- Drill into inspections and lease audits in real time—as they’re completed—for full context.
Step 4. Reduce or Eliminate Manual Errors
When processes are manual, the odds of making errors are greater. The right technology can turbocharge error reduction and elimination. Look for software that has required fields for inspectors and audits, automates rent roll processing, and imports from your PMS so manual inputs are not necessary. The technology should support mobile devices and include features that enable members of your team to:
- Upload and attach high-resolution images and photos during unit walks to provide context and eliminate subjectivity. For example, using the due diligence technology from HappyCo, Harbor Management Group eliminated the manual photo process.
- Work in the same file simultaneously without conflict during a lease audit.
- Receive incomplete inspection and lease audit notifications so they can resolve problems quickly.
- Ensure data sets for lease auditing are accurate with field validation, so auditors are prompted to enter currency vs. text in a particular field.
Step 5. Aim for “Instant Intelligence” with a Due Diligence Platform Designed for Multifamily
All that hard work shouldn’t be slowed down by a reporting process that takes days or more to complete. You need a platform that automatically collects, aggregates, and summarizes all the data gathered onsite quickly—in hours, not days. Look for a multifamily due diligence platform that offers different views and perspectives of data sets.
Each owner and audience cares about different things, so be sure the platform enables you to provide that flexibility. Core reporting is critical and should include:
- Unit financials and demographic breakdown
- Data quality
- Currency and lease variances and concessions
- Cost breakdowns and summary by unit
- Photos and rating reports
With this platform, you can set inspections in motion quickly, with minimal disruption, while conducting a lease audit to identify discrepancies in leasing information. Add the Due Diligence product suite from HappyCo to the process, and you are more likely to make sure everyone is happy with the outcome. Just ask Zach Baker. “With the automated unit reports including inline photos, it's much easier to present property and unit issues confidently to the seller,” said Baker.