126: Due Diligence: More than Meets the Eye

Jul 21, 2020

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Multifamily Legacy Episode 127: Suggested Title: Due Diligence: More than Meets the Eye When Stuff Gets Real OR Due Diligence: Dark Side of Multifamily Investments

Where can you go wrong and make mistakes? When doing big deals, investors should do things in due diligence. Some will do it, some won’t. Most are not afraid to roll up their sleeves and get dirty.

Today’s guest is Jorge Abreu of Elevate, a real estate investment group that acquires value-add multifamily assets. Jorge’s construction background and commercial investment experience helps him to understand everything about due diligence.

Topics on Today’s Episode:

Raising Capital: Bigger you go, easier and safer the deal
CapEx Budget: Deal looks great, but then stuff gets real by doing due diligence
Down Units Difference: How bad are they? How will they impact CapEx budget?
Due Diligence Process: CapEx, maintenance, construction, software, pictures
Tracking Dirt: What happened in Unit 5? If you don't track/measure it, it gets lost
Faith and Honesty: Know more than seller and create opportunities to negotiate
Due Diligence: Do it to know what deferred maintenance and upgrades will cost
Don’t Be Lazy: Get bids and set expectations; a lot of work, but worth the effort
Construction Company: Elevate is a benefit, like property management
Team Building: Retreat to celebrate and offer recognition
Focus: Too much noise? Pick your passion and conquer it

Links and Resources Mentioned:

Quotes:

“If a seller’s talking, he's lying. He's definitely trying to skirt the issue.” Corey Peterson

“It makes no sense because it's going to come up, we're going to uncover it.” Jorge Abreu

“Whatever you find, can and will be used against you.” Corey Peterson

“People could steal all the time, they may slide out the back door. We can just talk about the dirt. The dark side of multifamily is scary." Corey Peterson

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