Before we jump in:

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We're starting our magic to revive this beautiful property. If this sounds like it's written for you or someone you know, please apply here or share this link.

Now let's get to business:

If you don't want to fall on a landmine in a commercial deal at some point in your career—HANG ON—I'll share what I use.

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The problem when you are under contract to buy a deal is that it is like carrying a hot potato.

There is so much going on during due diligence.

You carry a red-hot potato and you are running towards closing where your team is waiting for it to start cooking.

While you are running with it, you can always throw it away if it gets too hot.

The longer you run with it, the more you want to get to the finish line.

You need a good process to make sure you don't end up with a bad potato.

In the last 5 years, I have tried many ways to make it effective. I found that a simple checklist on my iPhone, shared with key team members, is the best method.

My goal in this email is to share a tool I learned the hard way. It can save you from losing hundreds or even millions of dollars.

As they say, "The best deals are deals you don’t buy."

This checklist will help you find the ones you don't want to own. It will also uncover sellers' problems before they become yours.

Many of you have different ways to go through due diligence.

Some may have a very sophisticated process. Some may have no process at all.

I tried using Google Sheets, Salesforce, and Notion for due diligence. After many costly mistakes, I found that a simple checklist in iPhone Notes works best.

Now don’t get me wrong, this is a high-level "Go" and “No Go” solution at your fingertips, shared with key team members.

We still have Google Sheets, Salesforce, and Notion integrated into our business. But the iPhone DD/Closing checklist must pass 100% for us to buy a deal.

This standard didn’t come free; we learned the hard way. I wish I had this tool five years ago; I’m glad to share this with you.

My template has 25 checkmarks. In specific deals, you may include a few extra checkmarks. But this should cover 95% of your basis, and if there are any surprises, you will uncover them.

Non-negotiable rule: do not skip any of them. (Ask me how I know.)

Copy this list into your iPhone Notes. Then share it with your key team members during the due diligence. You can add comments, work as a team, and progress through the list.

Here is the list; hope it helps.

1. EMD

2. PSA

3. Proforma

4. Construction Captain Assigned

5. CAPex Budget

   

6. Lease Study

7. Leasing Agent Assigned

8. Debt Memorandum

9. Debt Term Sheet

10. EIN/Articles

11. Taxes/Assessments Study

12. Insurance

13. Debt/Loan Commitment

14. Appraisal

15. Title

16. Phase 1/2

17. Operating Agreement

18. Bank Account

19. Floor Plans

20. Offer Memorandum

21. Equity Raised

22. Property Manager Hired

23. Zoning Study/Zoning Letter

24. Survey

25. Estoppels

Takeaways

1. You should check all (100%) systems, like pilots do. Don't leave any stone unturned before you take down the property.

2. There is a balance between complex and easy. You are more likely to skip a step when using a complex CRM than when using a simple checklist on the phone.

3. The due diligence checklist is non-negotiable to avoid deadly landmines in the game of commercial real estate.

Be Well,

Saul!