The Due Diligence Period
Due diligence is the investigation period (typically 30-90 days) after a purchase agreement is signed but before closing, during which the buyer verifies everything the seller claimed. Physical due diligence includes property inspections, environmental assessments (Phase I ESA checks for contamination history), structural engineering reports, and roof/HVAC condition assessments. Financial due diligence verifies rent rolls, lease abstracts, historical operating statements, tax assessments, and utility costs. Legal due diligence reviews title reports, survey accuracy, existing liens, zoning compliance, and pending litigation. A single missed issue — an undisclosed underground storage tank, a below-market lease with 15 years remaining, or a building code violation — can destroy investment returns.