Investment Property Checklist
Underwriting, due diligence, financing, and closing — the investor playbook.
Most first-time investors lose money on the property they didn't underwrite hard enough. This checklist walks you through serious underwriting, due diligence, financing, and closing — the same workflow experienced investors use to keep cap rate, cash-on-cash, and DSCR honest before the offer goes in.
Underwriting (before you tour)
- Pull rent comps from at least 3 sources.Public listings, property managers, Rentometer — never trust one number.
- Model gross rent multiplier and cap rate.Compare against neighborhood averages for the asset class.
- Calculate cash-on-cash on year-1 actuals.Include vacancy, repairs, capex reserve, property mgmt — not just PITI.
- Stress-test at -10% rent and +20% expenses.If it still cash-flows, the underwriting is honest.
- Verify financing terms with a portfolio / DSCR lender.Conventional caps at 10 properties; portfolio lending has different math.
Due diligence (under contract, week 1)
- Request 2 years of rent rolls and T-12 financials.Compare claimed rents to actual deposits and bank statements.
- Inspect every unit — not just the model.Vacant units and 'just-rented' units hide deferred maintenance.
- Get a professional sewer scope and roof inspection.These are the two most expensive surprises in small multifamily.
- Confirm zoning and rental license status.Some cities cap short-term rentals or require unit licensing.
- Review existing leases and tenant ledgers.Below-market rents, lease term, security deposits, and arrears.
Financing (under contract, weeks 1–3)
- Lock financing terms with selected lender.DSCR, conventional, or commercial — confirm rate, fees, term, prepay.
- Confirm cash reserves required at close.Lenders typically want 6 months PITI per property in reserves.
- Order property appraisal.For multifamily, confirm appraiser experience with the asset class.
- Set up entity / LLC if titling under one.Confirm with lender — some require personal guarantee + LLC.
- Get insurance quotes for landlord policy.Liability, loss-of-rent, and replacement cost coverage.
Closing & turnover (final 2 weeks + week 1 post-close)
- Review Closing Disclosure / HUD-1.Confirm prorated rents, security deposits transferred, taxes prorated.
- Confirm security deposit transfer in writing.Required by most state laws; protect yourself with an escrow ledger.
- Send tenant introduction letters and W-9.Where to pay rent, who manages, emergency contact.
- Re-key locks and update access codes.Standard turnover step even with existing tenants.
- Set up bookkeeping / property management software.Stessa, Buildium, AppFolio — track from day one.
Frequently asked questions
It depends on the market and asset class. Stabilized small multifamily in Florida typically trades at 5.5–7.5% cap; class-A apartments lower; value-add deals priced at higher caps. The right cap rate is the one you can defend in your underwriting.
Most serious investors do — for liability protection and clean books. Confirm with your lender; some require personal guarantee plus LLC titling. Talk to a CPA about state-specific tax treatment before forming.
Plan for 25–30% down plus 3–5% closing costs plus 6 months PITI in reserves. A $400K rental typically needs $120–150K liquid at close.