As an investor, conducting due diligence on a property is critical to ensuring a successful investment. Part of this process involves reviewing the purchase contract and other documents with an attorney. There are several key items investors should specifically address in their attorney review letter to uncover any red flags before closing on a deal.
Inspection Issues and Serious Repairs: Investors should review the results of any professional inspections conducted on the property. If there are any major issues identified, investors should address how those will be remedied, either through credits, repairs by the seller, or a lower purchase price.
Current Leases, Rent Payment Status, and Contracts: For investment properties with existing tenants, investors should review details on current leases, including rent amounts, payment status, renewal options, and end dates. They should also review any service contracts, like landscaping or laundry, that will need to be addressed after closing.
Water Bills and Zoning Legality: Investors should verify that all water bills are paid up to date and that the property's zoning is legal. In some cities, like Chicago, unpaid bills can become a lien on the property, and zoning issues can lead to costly fines or legal complications.
Security Deposits: Ensure that security deposits from existing tenants are properly transferred or returned to avoid liability and legal issues. Investors should request documentation of the security deposit amounts and confirm that they will be transferred at closing or returned to the tenants as required by law.
Building Code Violations, Title Reports, and Ongoing Court Cases: Investors should check for any building code violations, review title reports for any liens or encumbrances, and inquire about ongoing court cases involving the property. Addressing these issues before closing can help prevent unexpected complications and ensure a safe investment.
By addressing these five items in their attorney review letter, investors can uncover potential issues and negotiate solutions before closing on a property. This proactive approach can help protect their investment and set them up for success in the long run.
The key to successful real estate investing in Chicago is preparation and knowledge. By downloading our free eBook, "What They Don’t Tell You About Real Estate Investing" you will gain the insights needed to invest confidently in Chicagoland real estate. Whether you're a local investor looking to scale up or an out-of-state investor entering a new market, this resource provides the information you need to maximize your returns.
- Guest Name: CHANCE BADERTSCHER
- Guest Company: Lavelle Law
- Guest Link: https://www.lavellelaw.com/
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