Conducting Due Diligence Onsite

Thursday, November 1, 2012, a group of twelve+ people descended upon an office a full twenty minutes before the Office was scheduled to open and before they were expected to arrive. The Manager was fielding a couple of No Heat calls, trying to collect the rent checks that had been dropped into the after hours drop box and the phone was ringing. To say it was a bit hectic was an understatement.

Just a word of advice for all you going about your acquisitions: conducting property Due Diligence tours on the day rent is due is inconsiderate of the onsite team. The extending of hands and the exchanging of business cards of twelve+ people at the same time, all while asking for things like making umpteen copies of this twenty page document is not the best way to introduce yourself to a Manager, Leasing Consultant or Maintenance Tech. Then stating you need keys to the units NOW is also rude and thoughtless.

Treating the onsite team as your personal servants and gophers is not acceptable either.

While I am at it, you should be respectful of the property itself and of the Residents who reside at the property. You should refrain from making the following statements while touring the community:

“Jeez. What kind of person lives here?”

 “Hey, Karl, look at this!” Apparently, looking through someone’s cabinets and commenting on the shelved items is permissible, not to mention making similar comments when opening the bedroom closets to that particular team.

“The stove in this one is newer. They should have updated all the appliances. How do these people live like this?” (The appliances are between 1-15 years old.)

“Wow, this bathroom is dark. We will have to rip out the soffits and install better lighting.” (This would be okay in theory, except that the Resident standing there listening to this remark is left feeling criticized, I am told.)

The following tips would be advisable for these Due Diligence inspection teams.

1. Arrive after the Office is open for the day. This will not make the onsite team feel rushed, as though a plague of locusts has descended upon them.
2. Arrive with donuts for the onsite team.
3. Have one spokesperson introduce himself to the onsite team and explain who will be conducting the Lease Audit and who will be doing the Unit Walks. It is not necessary to try to pass out everyone’s business card.
4. The Management Company should have a representative there on site to answer the Acquisition Team’s questions. Typically the Prospective Buyer and Reps have been provided all the needed documentation prior to the Due Diligence date. Any documents requested, such as a Rent Roll, must come from the Management Company as all information must be warranted as accurate. This cannot be the responsibility of the onsite team.
5. Refrain from making derogatory comments about the team, property and residents in the presence of the current team and residents.
6. Make notes regarding age of appliances, condition of carpet, and apartment interiors. Refrain from commenting about improvements you are considering making. Remember, the Residents usually do not know who you are or why you are in their homes. It may cause undue stress to a Resident to hear someone is buying the property or that there is new ownership coming.
7. Be considerate of those site members who are unlocking and locking doors. Ask instead of demanding immediate attention. They are there to help you and they will help as best they can.
8. Turn off any lights you turn on in someone’s apartment. Remember, you are not paying that Resident’s electric bill. Do not sit on their furniture or use their bathroom.
9. If you are not inviting the onsite team to join you for lunch, or bringing in lunch for them, then it is impolite to discuss your lunch plans in front of them.
10. Remember to thank them for their time and let them know when everyone is leaving the property.

I cannot emphasize enough the amount of stress transitions like this can cause an onsite team. The Due Diligence team should conduct themselves with the utmost care and consideration of the onsite team. Just saying ….