Due Diligence

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Geltinc
August 02, 2009

We officially have our 376 unit property in Houston under contract. We will be conducting our due diligence on the property for the next 30 days. Due diligence simply means investigating the inves...

We officially have our 376 unit property in Houston under contract. We will be conducting our due diligence on the property for the next 30 days.

Due diligence simply means investigating the investment from all angles to see if it makes sense. We might find a property that looks promising and want to tie it up before someone else gets it in order to have time to investigate it. Its our responsibility to do our homework. We cant depend on the good word of the seller, because sellers sometimes dont know, sometimes dont care or sometimes dont tell. We cant depend on the legal system (many state laws dont protect an investor from misrepresentation like they protect a homeowner, plus lawyers are expensive).

Yes, many people buy investment properties without a hitch, but hitches happen and we dont want hitches happening. There may be places to skimp and save money in the process, but this isnt one of them.

During this trip we planned to get quotes from property managers and contracts for rehab and management work. We scheduled time to drive the area and visit shops and ask shop owners about the health of the local economy.

We met with Mosaic Residential who brought along two contractors that will be bidding for the rehab work. There will be a tremendous amount of rehab that will have to take place in order for our property to be fully operational. We interviewed these contractors along with different property managers to find the best ones for this particular property. This property happens to have about 30 % occupancy currently. The reason this is so low is that a majority of the units were damaged last year when Hurricane Ike rolled through Houston. A majority of the units have already been gutted however a good portion of them need to still be demoed.

Check out our video from the first day to keep up with us at Gelt Inc!

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