Due Diligence is the disciplined process you use to reduce multifamily investment risk. This risk typically comes in four categories when you are investing in Apartments.
- Market Risk: Will the fundamental conditions of this market allow me to meet return on investment (ROI) goals?
- Financial/Performance Risk: Does the projected financial performance of this property meet ROI goals.
- Tenant Risk: Does the investor have a complete understanding of the leases in place, the credit characteristics of the current residents, and the behavioral / criminal issues that may be present in the property. Is the plan to resolve issues clearly understood and are the staff / resources identified to correct and effectively manage residents risk in the future.
- Physical Risk: Will the physical structure of this property support my ROI goals? What is the plan to manage this risk and capitalize on opportunity from this.
