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  • Writer's pictureJim Calvo

Most Important Due Diligence Item: Site Visit

Updated: Apr 27, 2022

Every CRE Investor should inspect the target property early in due diligence. This may seem like a simple, basic and fundamental item that no Investor would skip but surprisingly many Investors will make this mistake and invest millions of dollars buying an asset they have never seen. This mistake is made by both novice investors as well as seasoned pros.



Buyer's feeling the pressure to identify replacement properties in a § 1031 exchange will sometimes add several properties to their list of replacement properties they have never seen - perhaps recommended by their broker. Time and cost constraints will not always allow for several plane trips to view all the potential replacement properties. A seller may identify three assets with the thought that they plan to close on their one primary target relegating the others to backup positions. Then the primary target falls out and the backup moves into primary position. The deal moves forward, Buyer's schedule gets busy and due diligence suddenly ends without a site visit. Partnerships can complicate matters with partners saying later, "but, I thought you saw it before we purchased it."


A collegue of mine recently asked for my opinion of a CRE investment found on a popular crowdfunding site. I told him that I had made it a policy early in my career not to give opinions about CRE deals I had not yet seen. I don't think my caution was appreciated by my collegue since he had already had success investing in several similar crowdfunded deals sight unseen based on the information presented in the investor package.


There is no substitute for an Investor's personal and thorough site visit of a CRE asset. Buying properties sight unseen is a lapse of good judgment and should be avoided. Time and cost constraints and the risk of losing a deal can be good reasons to go to contract before a site visit. However, once a property is under contract a site visit should be the first and highest priority item of due diligence. A serious CRE Investor must use their own eyes to inspect the physical characteristics of the Property and neighborhood or area nearby. A site visit allows for questions of the neighbors or store manager or others found in and around the target property. Pictures and Google Earth are poor substitues.


Over the years I have heard many Investors say, "The deal looked great on paper but I went to see it and I was not impressed and I didn't like what I saw and so I decided not to move forward." Unfortunately, I have also heard the somber statement: "I should have taken the time to see it before we closed but now that we own it we will have to make the best of the situation”

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