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DRIVEBY CHECKLIST
A hitcher’s guide to the due diligence process when
buying apartment buildings
Our Drive-By Checklist provides a preliminary, yet thorough and sys-
tematic, approach to visually record your observations and opinions
regarding the physical condition of the property you are evaluating.
Keep in mind that the purpose of this checklist is to ensure complete
coverage of the critical items and provide you with an overview
of where your property might be positioned in the marketplace.
Further, and perhaps more importantly, it will illustrate how and to
what extent the physical condition of the property will affect your
buying strategy and ultimately your interest in pursuing the property.
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Please visit our website where these checklists and forms
have been formatted so they can simply be snapped into a binder
and away you go. Pay special attention to the following areas:
{ Roof - This may be the single most important item to look
at.What style is it: flat or peaked? Does it look old or new?
Are there eve troughs? A seasoned investor will likely have a
good feel for how much repair or maintenance it may take
and when. However, if you are a new investor, don’t look for
exacts here, just impressions, e.g. “Wow, that’s going to need
some work,” or “It looks pretty good, no immediate cost.”
{ Note the cars in the parking lot. Are they late-model or are
they run down, on blocks, parked on the lawn? Is the lot full
or empty? Ideally you want tenants who are at their jobs,
not hanging around their units watching TV all day.
{ Look at the windows. Are they open? If it is winter, and a
great many are opened, this could mean the property has
heating issues, i.e. if it is 0°C outside, the residents are too
hot. If the owner is paying for the utilities, this really adds
up fast. If it’s summer, the same is true for air-conditioning.
{ Note if the phone and cable TV wires are run all over the
outside of the building like a spider web or neatly hidden.
Also how are satellite dishes dealt with?
{ Find the garbage bins. Are they overflowing? If the bins are
surrounded by a huge overflow of trash, the owner may
not be scheduling enough regular pickups. As a buyer you’ll
know that the line item for trash on the seller’s financials is
too low. While you’re at it, take a look at the type of trash
that’s lying around; it can speak volumes about the current
residents.
{ What does the landscaping look like? Does the grass need
to be cut? This could be a good indication of the quality of
current management.
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{ Look for doors that are purposely blocked open. If it’s a
secure entry building, this can be a bad sign. Why are res-
idents creating easy access to the building? Hopefully not
for drug trafficking, but definitely worth noting.
{ Note the age and condition of the windows. Like the roof,
these can be a high cost item should they need to be
repaired or replaced in the near future.
{ Are the window coverings consistent? This may sound trivial
but a good property should make a great first impression. If
there is a mix of old, ugly or inconsistent blinds, you want
to note this. It may again be a measure of the quality of
management but, more importantly, you will want to budget
accordingly to address the situation.
{ Is there a ‘For Rent’ or ‘No Vacancy’ sign? This will provide
clues as to the occupancy of the building.
{ Do you see puddles of water? If you see standing water on
the driveways, sidewalks, roofs or worse, along the building’s
foundation, the property may have serious drainage issues.
This will undoubtedly lead to money requirements down
the road so it should be noted carefully for future reference.
{ Have a look for other structures on the property. What
type of condition are they in? Parking structures in partic-
ular may need extra work. Are there utility sheds or tenant
barbecue areas, etc.?
{ What do the surrounding grounds look like? Is there trash
everywhere, shopping carts on the lawn? If there are trees
and flowerbed areas or walkways, are they well kept or not?
{ Note the condition of the building itself. Are brick repairs
needed? Does the property need to be painted?
{ Find utility meters. Sometimes the meters are inside the
building but frequently they can be found along the proper
exterior.This is a quick clue in determining who’s paying for
utilities, the tenants or the owner.
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{ Note the foundation. Is there structural damage? Look for
cracks in the exterior walls and for any movement or shifting
in the foundation.
{ Have a look at the buildings next door or across the street.
You can tell a lot about the neighbourhood by looking at
other properties on the block.
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DRIVEBY CHECKLIST
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Note:
We use this weighted rating format to help us decide whether or not
to proceed with a property.We first rate the condition, then decide
on its priority. We multiply the two together to produce a total
weighted rating that accounts for both condition and importance.
This method, in general, keeps a low priority item in excel-
lent condition from overwhelmingly out-weighing a high priority
item in poor condition.
If everything had the highest rating and highest priority, the
total score would be 210. If all were at the lowest end, the
score would be 14.
We aim for scores to be in the 120+ range, but you can set
your own ratings and targets.
