Apartment due diligence should establish what you are buying, the lawful income it produces, the obligations you inherit, and the work it needs. A marketing rent roll is a starting point. It needs to be reconciled with leases, collections, expenses, condition, and public records.
How should I verify the income?
Request the current rent roll, signed leases and amendments, concessions, deposit ledger, payment history, and relevant notices or disputes. Compare the rent roll with actual collections for an identified period. Explain vacant units, arrears, owner use, and nonrecurring receipts separately.
Ask what supports each proposed increase or new tenancy assumption. A vacant-looking unit is not proof that it can be delivered free of occupancy rights. Review the rental-law questions with qualified counsel before depending on a change in use or tenancy.
How should I verify the expenses?
Review utility bills, service agreements, management costs, insurance, property taxes, repair invoices, and recurring building charges. Distinguish recurring operations from deferred maintenance and capital projects. A seller’s unusually low maintenance year may not represent a sustainable budget.
Obtain insurance information for the proposed owner and use. Do not assume the seller’s premium or policy will transfer. Model acquisition-related tax changes rather than copying the current bill. The BOE supplemental-assessment guidance explains why a qualifying ownership change can generate additional assessments.
What should the physical review cover?
Have the relevant professionals evaluate roof, structure, electrical, plumbing, ventilation, moisture, life-safety issues, and material concerns. Identify access limitations and what was not inspected. Request written scope and timing for known work so that an operating budget does not conceal a substantial capital obligation.
Use the renovation learning center to coordinate wiring, seismic, permit, and older-material questions. It helps organize review; it does not replace a property inspection or engineering assessment.
Do the records match the building?
Compare advertised unit count and use with title, disclosures, plans, permits, and available city records. The SF building-records service and permit-tracking system provide starting points. An address or room arrangement alone does not establish an authorized separate dwelling.
Have title exceptions, recorded restrictions, ownership structure, and unresolved violations reviewed. For shared interests, confirm allocation of income, expenses, approvals, and control. A private agreement and city authorization answer different questions.
How should findings change the offer?
Maintain an issue list with the evidence, responsible professional, decision deadline, possible cost, and effect on the proposed plan. Separate a condition that can be priced from one that may prevent the intended use. Do not remove relevant protections merely because a pro forma shows an attractive return.
Update the income analysis and financing assumptions as facts arrive. Keep the completed file for the transition to management and eventual resale.
Use this guide to organize questions for the relevant property, legal, tax, lending, and insurance professionals. Actual requirements and financial outcomes depend on the property and the proposed plan.