“Follow the 6 P's – Prior Proper Planning Prevents Poor Performance.” – Unknown
Buying and selling an apartment or a commercial investment property can be a tough deal. Why? All of the things you must remember!
I just heard of a guy trying to close a 200 + unit apartment property and it fell through. Want to know why? I will make a long story short and just say he did not create, nor complete a closing checklist. He just basically showed up and hoped it would all work out.
It is amazing to me that even on a 200 + unit deal, this investor thought that the final loan approval was the last step in putting the deal together. In reality, that is when things can be the most busy of the entire purchase process. Thankfully most of us are smarter than that BUT it pays to be prepared.
I have put together a quick closing checklist that you can use for your next apartment property purchase. By no means does this cover everything, but is a good example of a real-life checklist that I have used in the past. Here is my closing list:
1. Call to switch over all utilities and trash removal services.
2. Re-check a current certified rent roll for the property.
3. Request a separate check at closing for rental deposits.
4. Ensure all negotiated items are completed and acceptable. (Any repair items, etc. that need to be done.)
5. Check that the property rents have been prorated and credited to me, or ensure that I am receiving a separate check at closing for it.
6. Purchase and make sure property insurance is ready to go on the closing date.
7. Work with bookkeeping and double check that any new accounts are set up.
8 If a new entity is being created for the purchase (and may I recommend you do so) ensure a new Federal Tax ID is retrieved, and that bank accounts and other vendors are set up for the new entity.
9. Obtain all partner and investor contact and account information.
10. Double check that all lender documents and closing documents are in order.
11. Ensure the property has clear title.
12. Obtain copies of all leases.
13. Obtain all keys to the property.
14. Perform final walk-through and inspection of all units.
Again, this list is by no means all-inclusive for your next apartment property closing. Every purchase has its own nuances and needs, but the lesson is this: have a list ready to go. Create and complete your closing checklist before you go to the closing table AND make sure that you have checked off your items before the closing date. Performing this simple step will help make one of the most busy times during the purchase go easier, and ensure a smooth transition to the new owner… you!