Real estate due diligence is the buyer's chance to test the story in the marketing package against the files that actually support it. On a multifamily or commercial deal, that work is mostly document review. You compare the offering memorandum, the rent roll, the trailing twelve-month statement, the leases, and the title or survey package. A clean brochure is not the same thing as a clean file. The point of the review is to find the gaps while you can still change the model, the price, or the decision to walk.
Create an account and start a property report from the documents you already have.
This guide is for acquisition teams, owner-operators, and brokers who underwrite income property. It is a review sequence, not a home-buying checklist, and not legal, tax, or investment advice. A generated model can be wrong. You still have to check every figure against the source document before you rely on it.
What real estate due diligence is asking you to prove
A seller's package is built to get a bid. Real estate due diligence is the window when you decide whether that bid still holds after you see the backup. The question is simple. Do the source files support the income, the expenses, and the rights the marketing piece describes?
Residential search results often talk about inspection fees, earnest money, and how long a home buyer has before closing. Those rules do not map onto a multifamily acquisition. Apartment and commercial deals usually give the buyer a negotiated investigation window. The file is larger, too. It includes tenant rights, historical operations, service contracts, and exceptions on title.
Counsel typically treats commercial diligence as the buyer's investigation of title, leases, rent, taxes, physical condition, zoning, and environmental issues. Your counsel owns the legal conclusions. Your job on the acquisitions desk is to make the financial story match the paper.
Treat the offering memorandum as a claim, not as evidence. It can summarize unit mix, in-place rent, occupancy, and trailing expenses in whatever light helps the listing. The rent roll, the T-12, the leases, and the general ledger are the evidence. When those disagree, the evidence wins, and the model changes.
Build the request list before you open the model
Do not start by typing the brochure's net operating income into a spreadsheet. Start by writing down what you have, what you asked for, and what is still missing. A short request log keeps a fast process from skipping the file that would have changed the offer.
Record the source, date, format, and scope of every file. Note whether a document is a broker summary, an owner-prepared report, a third-party report, or a primary record. A polished summary should not silently become the source of truth for a number that belongs to a lease, an invoice, or a tax bill.
Ask for these groups, then mark each item requested, received, or still open:
- Marketing: the offering memorandum or flyer, the broker's model, and any rent comparable set the listing used.
- Income: the current rent roll with an as-of date, leases and amendments for a sample or for every material tenant, and a recent delinquency or collections report.
- Operations: a trailing twelve-month statement, the current-year budget, and trailing real estate tax bills.
- Rights and condition: the existing title report, the survey if one exists, a zoning letter or certificate of occupancy where the seller has it, and any environmental report already in the file.
- Contracts: the property management agreement, service contracts that survive closing, and a list of open capital projects.
A third-party commercial checklist, such as Partner Engineering and Science's CRE due diligence checklist, runs much longer. It covers environmental site assessments, property condition reports, tenant files, and aged receivables. Use a list like that with your counsel and your inspectors. Do not treat it as something the acquisitions analyst finishes alone inside the underwriting model.
Date every file. A rent roll from March and a T-12 that ends in December are not the same month of operations. If the seller sends a PDF with no as-of date, ask for the export from the property management system before you lock assumptions. A one-page flyer can open the question list. It cannot supply unit-level rent or trailing expenses.
Read the packet in an order that catches mismatches
Work from the claim to the source, then from the source back to the model. That order keeps you from polishing a pro forma the file does not support. Most weak models start because someone modeled the OM while the rent roll was still downloading.
- Skim the OM for the numbers that drive price. Mark in-place rent, loss-to-lease, occupancy, other income, operating expenses, and any stated capital plan. Write those figures down so you can test them. Do not paste them into the model yet.
- Separate history from the pitch. Flag which lines are actual, normalized, budgeted, or estimated. A value-add story about future rent is not the same number as in-place rent. List missing exhibits and footnotes that would change how you read a line.
- Open the rent roll and confirm the as-of date and unit count. Check that the unit mix in the OM matches the roll. Flag vacant units, concessions, and any rent that looks like a market guess rather than a charge. Field-level rent roll review belongs in a dedicated pass. Why a clean rent roll is still a claim covers how a tidy export can still hide conversion problems.
- Tie the roll to a lease sample. Pull leases for the largest units, the newest move-ins, and any tenant the OM treats as a value-add story. Confirm start date, end date, base rent, and concessions. If the roll and the lease disagree, the lease controls until someone shows you an amendment.
- Lay the T-12 next to the rent roll, not next to the OM. Income on the trailing statement should be explainable from the roll and from other-income support. Expenses should be traceable to invoices, tax bills, or contracts. Here you only need to see whether the OM's expense story survives the statement. A full trailing-twelve rebuild is its own analysis.
- Check rights the model never shows. Title exceptions, easements, survey comments, and zoning limits can cut parking, access, or unit count. If the survey and the OM's site plan disagree on acreage or access, stop and ask. Do not average the two numbers.
- Only then build or refresh the model. Use the reconciled figures. Keep the source file in the same folder as the model so the next reviewer can see why a line moved.
On a commercial lease file, also confirm escalations, renewal options, reimbursement terms, and remaining tenant-improvement obligations. A rent roll total can look healthy while one large lease expires inside the hold period. Write that date down before you talk about the cap rate.
Which file wins when the numbers disagree
You will find mismatches. Decide in advance which document wins, and write the exception down. A team that uses judgment with no rule will ship two different models from the same packet.
| Conflict | What to trust first | What to do in the model |
|---|---|---|
| OM rent versus rent roll | Rent roll, if it has an as-of date and unit detail | Replace the OM rent. Note loss-to-lease separately from in-place rent. |
| Rent roll versus signed lease | The lease and any signed amendment | Correct the unit. Ask for the amendment if the roll is newer than the lease. |
| OM expenses versus T-12 | The T-12, then invoices or the general ledger | Underwrite the trailing figure unless you have support for a cut. |
| T-12 taxes versus the tax bill | The taxing authority's bill | Use the bill. Do not let a seller's normalized tax line stand alone. |
| OM unit count versus roll or survey | The roll, then certificates or the survey | Stop. A unit-count break changes income and often price. |
| Brochure NOI versus your tie-out | Your tie-out | Show both figures. Price off the tie-out, not the cover page. |
Partnerships and S corporations report rental income and expenses to the IRS on Form 8825. A tax return can be a useful cross-check on historical operations. It is not a monthly T-12, and it is not a rent roll. Do not force last year's tax categories into this year's underwriting without reading the statements behind them.
Keep a bridge from the reported results to the figures in the model. Each adjustment needs a description, an amount, a period, a supporting document, and a status. That bridge is what you reopen when the seller answers a question or a new report arrives. It is also what a second underwriter needs if you are out the next day.
Three breaks that should change the offer
Not every mismatch is fatal. These three usually are, because they move income, rights, or timing. Write each one as a single note: the figure in the OM, the figure in the source, the file name, and the as-of date. That note is what you send back to the broker.
Income the leases do not support
The OM may show market rent as if residents already pay it. If the leases and the roll show a lower in-place rent, or a free month the roll buried in a note, year-one income is lower. Re-trade or re-underwrite before you treat loss-to-lease as cash in hand. Watch for vacant units marked occupied, a cluster of expirations, and rents that do not match the executed lease or the latest renewal.
Expenses that only exist in the brochure
A seller adjustment that cuts payroll, insurance, or taxes needs an invoice, a bid, or a tax bill. If the support is a sentence in the OM, leave the trailing expense in the model and footnote the claim. Cutting it with no paper is how teams miss the debt yield later. A favorable variance is not durable just because it helped last quarter. Ask what caused it, whether the cause is documented, and whether the underwriting case should keep it.
Rights the model cannot see
A title exception, a short remaining term on the largest tenant, or a survey that disagrees with the site plan can erase value the cap rate never captured. Flag those for counsel and for the person who will walk the property. Do not plug a legal or physical issue in as a small operating expense. Unit count, acreage, and access either survive the roll, the certificate, and the survey notes, or they do not.
Keep financial review separate from the legal close
Document review for underwriting does not replace the rest of real estate due diligence. Title counsel reads the commitment. An environmental consultant reads the site reports. A property condition consultant reads the building. Your insurance broker reads the loss runs. Those specialists can kill a deal that looked fine in the rent roll.
Match each third-party report to the property address, the inspection date, and the scope you actually bought. A report on the wrong building, or a Phase I that excluded a parcel, is not comfort. When a deal needs an environmental inquiry, the EPA's All Appropriate Inquiries fact sheet explains how the federal rule relates to recognized Phase I standards. It is a reference, not a sign-off, and it does not replace qualified environmental or legal advice.
The American Land Title Association has long noted that commercial transactions need a broader investigation than a house purchase, including surveys and title work that residential files often skip. See ALTA's note on due diligence complexity in commercial transactions. You do not need to become the surveyor. You do need to stop the model when their comment conflicts with the OM.
Keep their findings in the same tracker as the financial tie-out. A model that still shows 200 units after the survey question cut the count is a process failure, even if the spreadsheet balances. For a broker sharing a deal with buyers, the same rule runs in reverse. Send the source files with the model, and say which figure came from which document. Buyers who only receive a polished workbook will redo the review, or they will price the uncertainty against you.
Where a document workflow helps, and where it stops
Software can shorten the first pass through a packet. It should not turn an extracted value into an unquestioned fact. On a multifamily deal, a team may forward or upload a flyer, an OM, a rent roll, or a T-12, review what was pulled out, adjust assumptions, and download an editable Excel model. The control that matters is the review step. Confirm classifications, unit mix, periods, and source documents, especially when the file is a scan, has handwriting, or uses an unfamiliar layout.
Slung's underwriting path is built around that handoff. Documented uploads are Excel, CSV, and PDF. A flyer can start a draft. It does not fill in rent-roll or T-12 figures that were never in the file. Email to sam\@slung.ai is an entry point, and a new sender may be asked to create an account. Plans are named Free Analyst, Principal monthly, and Principal annual. Public pricing is call for pricing. The Slung documentation describes the review, share, and export steps in the product as of the current docs.
Nothing in that draft is a substitute for reading the documents yourself. Slung output can be inaccurate. It is not professional financial, tax, investment, or accounting advice. If your firm wants a custom workflow on its own files, that is a separate scoping conversation, not a feature of the self-serve model. Teams that want to see one live packet walked through can book a demo. A demo request is a conversation, not a confirmed meeting.
If the first pass should come from the offering memorandum, rent roll, and T-12 before analysts edit assumptions, book a demo and bring one real packet.
A closing check before the model leaves your desk
Do not keep unresolved questions in an email thread. Use one discrepancy log. Give each row an issue, a source document, the assumption it touches, the consequence, the person who owns the follow-up, and the resolution. Group rows by income, expenses, physical condition, legal, environmental, and missing files.
Prioritize the items that can change the purchase decision, the financing case, the capital plan, or a contingency date. A formatting mismatch can wait. A missing lease, an unsupported rent increase, or an unbudgeted repair cannot. Keep the original source and the revised assumption visible so another reviewer can reproduce the reasoning without calling you.
Before you circulate numbers, answer four questions in writing:
- Does every income line trace to the rent roll, a lease, or an other-income schedule with a date?
- Does every operating expense you cut below the T-12 have support outside the OM?
- Did unit count, acreage, and access survive the roll, the certificate, and the survey notes?
- Are open items listed as open, instead of filled with the brochure's estimate?
If you cannot answer yes, the package is not ready for an investment committee or for a buyer. Real estate due diligence is finished for underwriting purposes only when a second person can follow your tie-out. Strong review is less about finding one perfect document than about making the evidence connect. When the OM, the rent roll, the T-12, and the leases tell different stories, the discrepancy is the work.
FAQ: questions teams ask during the document review
What is real estate due diligence on a multifamily deal?
It is the buyer's investigation before closing. For an acquisitions team, the core of that work is testing the offering memorandum against the rent roll, trailing financials, leases, title, and survey, then updating the model only from those sources.
Should I underwrite from the offering memorandum?
Use the OM to see what the seller claims. Underwrite from the rent roll, leases, and T-12 after you reconcile them. If a figure exists only in the brochure, keep it out of the base case or label it as unsupported.
What if the rent roll and the T-12 do not match?
Check the as-of dates first. A mismatch across different months is often timing, not a bad file. If the same month still disagrees on collected rent or occupancy, stop and ask for the general ledger or the delinquency report before you pick a number.
Does a model from uploaded documents replace a lawyer or inspector?
No. A financial model organizes income and expenses. It does not clear title, read an environmental report, or inspect the roof. Keep those specialists in the same review. Do not treat software output as financial, tax, or legal advice.
Where should I start if I only have a flyer?
A one-page flyer can open a file and a question list. It cannot supply unit-level rent or trailing expenses. Ask for the rent roll and T-12 before you circulate a full model, and say clearly which lines are still missing.
