Investment Strategy

A Due Diligence Checklist for Commercial Property Buyers

Due diligence periods feel short and the list of things to check feels endless. Here's a practical, section-by-section checklist so nothing that matters falls through the cracks before you're locked in.

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July 30, 2026

Industrial commercial property under due diligence review

Most commercial purchase contracts give you a defined due diligence period, often 30 to 60 days, to inspect the property, verify the numbers, and confirm you can actually finance and use it the way you intend. That window closes fast, and once it does, backing out usually costs you your earnest money. The buyers who get burned are almost never the ones who found a problem during due diligence. They're the ones who ran out of time to look.

Here's a practical checklist broken into the four areas that matter, so you can move through it methodically instead of scrambling in week five.

Financial Due Diligence

This is where you confirm the property actually performs the way the offering memorandum claims it does.

  • Trailing 12-24 months of financials. Request actual operating statements, not just a pro forma. Compare trailing performance against what was presented in marketing materials and flag any gap.
  • Rent roll verification. Cross-check the rent roll against actual signed leases for every unit or tenant. Confirm rent amounts, lease start and end dates, escalation clauses, and any concessions or free-rent periods that might not show up in the headline number.
  • Lease abstracts. For multi-tenant properties, abstract every lease: renewal options, termination rights, exclusive-use clauses, co-tenancy requirements, and any landlord obligations you'd be inheriting.
  • Accounts receivable and delinquency history. Understand which tenants are current, which are behind, and whether any concessions or payment plans are in place that aren't reflected in the rent roll.
  • Expense verification. Confirm property taxes (watch for a reassessment triggered by the sale itself), insurance premiums, utility costs, and maintenance history against actual bills and invoices, not estimates.
  • CAM reconciliation history, for NNN and retail properties. Confirm common area maintenance charges have been billed and reconciled accurately, and that there's no dispute history with tenants over CAM charges.

Physical Due Diligence

This is where you find out what you're actually buying, not what the listing photos show.

  • Property condition assessment (PCA). A third-party PCA evaluates the structure, roof, HVAC, electrical, plumbing, and parking, and estimates remaining useful life and near-term capital needs. This is the single highest-leverage inspection dollar you'll spend.
  • Roof inspection and age. Roofs are one of the most expensive line items to replace and one of the easiest to overlook. Get a specific roof report, not just a general contractor's guess.
  • HVAC system age and service history. Request maintenance records. A well-maintained older system can outperform a poorly maintained newer one.
  • Structural and foundation review. Especially important on older buildings or anything with visible settling, cracking, or water intrusion history.
  • ADA compliance walk-through. Non-compliance can mean unbudgeted capital expenditure shortly after closing, particularly on older retail and office buildings.
  • Parking and site conditions. Confirm parking ratios meet zoning requirements and current tenant needs, and check pavement, drainage, and lighting condition.

Legal Due Diligence

This is where deals quietly die, or get quietly saved, depending on what you catch.

  • Title review. Order a title commitment early and read the exceptions carefully. Easements, liens, and encroachments buried in title exceptions can materially affect use or value.
  • ALTA survey. Confirm boundary lines, easements, encroachments, and improvements match what's recorded. Surveys frequently surface issues, like a neighbor's fence over the property line, that title work alone won't catch.
  • Zoning and use compliance. Confirm the current use is legally permitted, not just historically tolerated. A "legal nonconforming use" can carry real restrictions on rebuilding or expanding if it's ever damaged or altered.
  • Environmental Phase I assessment. Especially critical for industrial, gas station, dry cleaner, and any site with a history of fuel storage or heavy manufacturing. A Phase I identifies whether further (and much more expensive) Phase II testing is warranted.
  • Certificate of occupancy and permit history. Confirm any past renovations or additions were properly permitted. Unpermitted work can become your problem, and your cost, after closing.
  • Existing service contracts and warranties. Understand what's assignable (roof warranties, service agreements, elevator maintenance contracts) and what isn't.

Financing and Timeline Coordination

Due diligence doesn't happen in a vacuum. It has to move in step with your lender's process.

  • Lender-ordered appraisal. This typically needs to be ordered early, since appraisal turnaround can eat weeks of your due diligence window on its own.
  • Loan underwriting timeline. Confirm with your lender what documentation they need and when, so financing contingencies don't expire before underwriting is complete.
  • Insurance quotes. Get quotes in hand before closing, not after. Flood zone status, roof age, and prior claims history can all affect both premium and insurability.
  • Extension provisions. Know your contract's process for requesting a due diligence extension before you need one. If a PCA or environmental report surfaces something that needs more time to evaluate, you want that option available, not something you're negotiating for the first time in week six.

Sequencing the Checklist So You Don't Run Out of Time

The most common due diligence mistake isn't skipping an item, it's ordering things in the wrong sequence and running out of runway. A Phase I environmental assessment or a full PCA can take one to two weeks to schedule and complete, and if either one surfaces a concern that requires follow-up testing, that's another delay layered on top. Order these on day one, not week three, even before you've finished reviewing the financials.

Title and survey work should also start immediately, since municipalities and survey firms have their own turnaround times you don't control. Financial due diligence, by contrast, is largely within your control once the seller provides documentation, so it's reasonable to run it in parallel rather than sequentially. A simple rule of thumb: start anything with a third-party turnaround time (PCA, environmental, survey, title, appraisal) on day one of your due diligence period, and treat everything you can control yourself as the flexible part of your schedule.

How I Help

I coordinate due diligence for buyers the way I'd want it done on my own deal: financial verification first, physical and legal review running in parallel, all of it tracked against your financing timeline so nothing slips past a contingency deadline. When something concerning turns up, and something usually does, I help you decide whether it's a negotiating point, a walk-away issue, or a non-issue that just needed a closer look.

If you're under contract or evaluating a property in Eastern NC and want a second set of eyes on your due diligence process, you can schedule a call here or reach me at sebastian@mullarkeycre.com.

This article is for informational purposes only and does not constitute investment, tax, or legal advice. Consult with a qualified financial advisor, CPA, and real estate attorney before making an investment decision.