CRE Due Diligence Checklist
Commercial Real Estate Investment Review

Team Evaluation  •  Market Analysis  •  Property Assessment  •  Rent Evaluation  •  Financial  •  SEC Compliance  •  Pitch Materials  •  Disclaimer  •  About

Stored at DueDiligence-CRE.ProsperSystems.biz

For guidance purposes only. Not intended to be comprehensive.

See PS Glossaries:
Funding  •  AI  •  Real Estate  •  Sales  •  Commodities  •  Oil & Gas  •  Mining

Expand All Items   Click to expand or collapse,
or click the ► after each item to open individually

Investors: a detailed analysis of a Commercial Real Estate (CRE) business investment is absolutely necessary to ensure that your active or passive investment is safe and profitable.
   Use the following Checklist and contact us with questions or suggestions.

We also do this for you at much less than your time, staff and omission costs,
finding great, active or passive investments — or — your next, lucrative asset.

↑Team Evaluation

Biographies

• Position: ► [Title and role within the team]
• Experience: ► [Experience in their designated functions and duties]
• Links to Online Professional Profiles: ► [LinkedIn and other online profiles]

Assess Team

• LinkedIn profiles: ► [Yes, or list profiles separated by ";"]
• Collaboration: ► [As seen on social media, such as search on LinkedIn]
• Check for previous Bad Players: ► [Prior litigation, regulatory actions, or investor complaints]
• See also – Operating Agreement below
• Sponsor Checklist – Download Sponsor Checklist with Video Summary by KGI Capital

↑Market Analysis

Demographics – match property tenant expectations

• Age: ► [Match specialty housing (55+, assisted living, nursing home) and medical facilities – list separated by ";"]
• Income per household: ► [Median; growth trends]
• Employment types: ► [Top 3–5, separated by ";"]
• Education level: ► [Median; match to tenant profile]

Growth Trends

• Stats: ► [Key growth statistics, separated by ";"]
• Area Rankings: ► [Near and similar market comparisons]

Employment Levels

• New Job Prospects: ► [Major employers arriving or expanding in the area]
• Potential Shutdowns: ► [Major employers at risk of closure or relocation]
• Inhibitors: ► [Thoroughfare access; transportation; jurisdictions' laws; possible changes such as sanctuary city status]

↑Property Assessment

As the main investment asset or part of a business investment or purchase.

• Corporate Entity(s): ► [Name; incorporation address; representative(s); officers – names separated by ","]
• Location: ► [Full address and submarket description]
• Class: ► [Current class; projected class after Value Adds]
• Age of Property: ► [Year built; major renovation dates]
• General Condition: ► [New, recent, aging, or distressed]
• Party Facilities: ► [Clubhouse, pool, common areas – condition and amenities]
• Laundry: ► [Machines; supply vending machine]
• Vending Machine: ► [Food; drinks]

Infrastructure

• Water Supply: ► [Pressure test results]
• Sewer Connections: ► [Scope inspection results]
• Internal Pipes: ► [No leaks; no failures]

Unit Contents

• Appliances: ► [Clean; up-to-date; matching]
• Furniture: ► [Clean; up-to-date; matching]

Energy Efficiency

• Doors: ► [Air tight; secure]
• Windows: ► [Air tight when closed; secure; openable per code]
• Window Coverings: ► [Generally blinds – condition and consistency]
• Appliances: ► [Energy Star rated or equivalent]
• Ceilings, Walls: ► [Well-insulated]

ADA Compliance

• Parking Places: ► [Number of ADA spaces; access quality]
• Ramps: ► [Present; compliant; condition]
• Elevators: ► [Present; compliant; inspection current]
• Signage: ► [ADA-compliant signage throughout]
• General Access: ► [Access without barriers throughout property]

Technology

• Security: ► [Cameras; access control; lighting]
• Communications: ► [Intercom; door entry systems]
• Internet: ► [Cable; WiFi availability and speed]
• Water Leak Detection: ► [Sensors; monitoring system]
• Fire Detection: ► [Sprinklers; alarms; inspection current]
• Occupancy: ► [Smart sensors or manual tracking systems]
• Rent Collection: ► [Online portal; payment processing]
• Accounting: ► [Software; period; how current]
• Cost Segregation: ► [Performed annually; documentation available]
• See also – Underwriting Detail

Aesthetics

• Paint: ► [Fresh; clean; consistent with neighborhood]
• Trees:

• Sturdy; healthy; pruned: ► [No dead branches or disease]
• Not threatening roofs or electrical wires: ► [Clearance confirmed]
• Not threatening foundations, pavement, or fences: ► [Root assessment done]

• Plants: ► [Healthy; pruned]
• Lawns: ► [Consistent; well-maintained]
• Concrete: ► [Clean; minimal cracking, breaks, or expansions; sealed]

Value Add Estimates

• Overall Cost: ► [Total estimated cost of all value-add improvements]
• Contractor Bid(s): ► [Number of bids received; selected contractor]
• Stages: ► [If phased, link to Timeline]

Deferred Maintenance

• Not listed above: ► [Any deferred maintenance items not covered in sections above]
• Completion costs: ► [Estimated cost to complete all deferred maintenance]
• Recent Costs: ► [Maintenance costs incurred in past 12–24 months]
• Additional amenity opportunities: ► [Daycare; storage; better parking; solar panels on parking covers; other revenue-enhancing additions]
• Contractual Obligations not disclosed above: ► [Any remaining contractual obligations affecting the property]

↑Rent Evaluation

• Current Rent Levels: ► [Current rents by unit type vs. market comparables]
• Growth Potential: ► [Gap between current rents and market rate; achievable upside]
• Growth Increase in Profit, based on NOI: ► [Projected NOI improvement from rent growth]
• Historical Growth Rates: ► [Rent growth rates over past 3–5 years]
• Rent cap laws or regulations: ► [Active rent control or stabilization laws; pending legislation]

↑Financial

• Financials: ► [Audited financial statements – 3 years minimum]

Loan Evaluation

• Owner Financing Possibility: ► [Seller carry-back terms available]
• Term Sheet: ► [Key loan terms; lender identity]
• Interest Rates:

• Reasonable: ► [Rate vs. market benchmarks]
• Pay-down Costs: ► [Points; origination fees]
• Interest-Only Duration: ► [Length of I/O period; amortization schedule]

• Floating Rate Ceilings: ► [Rate cap range; cap insurance cost]
• Down Payment – Loan to Value and/or Cost (LTV or LTC): ► [Reasonableness vs. market norms]
• Closing Time: ► [Time to raise capital; not too long; beware of quick-close lenders]
• Extension Possibilities: ► [Options to extend to avoid gap loans]
• Pre-payment Penalties: ► [Defeasance; yield maintenance; step-down]

Profit Analysis

• Gross Income: ► [Total potential income including all revenue sources]
• Operating Expenses: ► [All operating costs excluding debt service]
• Net Operating Income (NOI): ► [Gross Income minus Operating Expenses]
• Loan Payment and Interest: ► [Annual debt service]
• Net Profit: ► [NOI minus debt service]
• Cap Rate: ► [Computed cap rate vs. market normal]
• Cash on Cash (CoC): ► [Annual cash return on equity invested]
• Internal Rate of Return (IRR): ► [Projected IRR over hold period]
• Return on Investment (ROI): ► [Total return including appreciation]
• Equity Multiple: ► [Total distributions divided by equity invested]
• Present Worth Value of all Income: ► [NPV of projected cash flows]

↑SEC Compliance

• Private Placement Memo (PPM): ► [Disclosures; material risks; business plan – complete and current]

Subscriber Questionnaire

• Full Identification: ► [Name; company; EIN or SSN; physical and mailing addresses; additional contacts separated by ","]
• Accreditation: ► [Statement if 506(b); proof of accreditation if using other exemptions]

Subscriber Agreement

• Representations: ► [All investor representations present and signed]
• Warranties: ► [All warranties stated and acknowledged]
• Transfers: ► [Transfer restrictions and conditions clearly stated]

Operating Agreement

• Formation date: ► [yyyy/mm/dd]
• Partner Duties: ► [All duties listed, separated by ";"]
• Capital Contributions: ► [Amount; timing; consequences of default]
• Voting Rights: ► [Class of vote; threshold for major decisions]
• Share Type: ► [Preferred; common; class definitions]
• Manager Compensations: ► [All compensation items separated by ";"]
• Acquisition Fees: ► [All acquisition fees separated by ";"]
• Distribution Methods: ► [Waterfall structure; timing; separated by ";"]
• Investor Split after Paid Back: ► [GP/LP split after return of capital and preferred return]
• Dissolution: ► [Criteria for dissolution; liquidation options]
• Advertising: ► [General solicitation status; 506(b) vs 506(c) compliance]
• Fundraiser Agreements: ► [Registered broker-dealer or exempt finder agreements in place]

↑Pitch Materials

Electronic Storage Links

• Website: ► [Project or fund website URL]
• Investor portal: ► [Online investor portal link]
• Data Room: ► [Secure data room link]
• Webinar Replay: ► [Recorded presentation link]

Document Links – in addition to SEC Compliance Documents

• Overview: ► [High-level project overview document]
• Executive Summary: ► [One-page executive summary]
• Pro Forma: ► [One-page pro forma summary]
• Timeline Link:

• Relevant Information: ► [Key milestones and dates]
• Value: ► [Projected value at each milestone]
• Equity Requirements: ► [Capital needed at each stage]
• Loan Requirements: ► [Debt needed at each stage]
• Possible Refinances and criteria: ► [Trigger conditions for refinance]
• Possible Early Sales and criteria: ► [Conditions under which early sale would be considered]
• Use of Funds: ► [Breakdown of fund deployment, separated by ";"]

Quality of Materials

• Matches Offering Memo (OM) or Broker Listing: ► [Numbers and terms consistent throughout]
• Truthfulness: ► [Claims verifiable against third-party data]
• Compelling: ► [Clear investment thesis and differentiation]
• Reasonable Length: ► [20 pages unless required additional detail justifies more]
• Includes necessary sections to cover above: ► [All checklist categories addressed in pitch materials]

Fundraising Presentation Links

• By Management Team: ► [Presented by actual principals, not third parties]
• Replay available: ► [Recording accessible to prospective investors]
• Decent quality: ► [Professional audio/video; clear slides]
• Other investors shown: ► [Social proof of existing investor participation]
• Clear information: ► [Key terms and returns stated plainly]
• Questions answered: ► [Q&A session included; difficult questions addressed]
• Deeper information available: ► [Data room or supplemental materials offered]

Underwriting Detail Link

• Assumptions and controlling parameters: ► [All underwriting assumptions disclosed]
• Yr 1 monthly; Yr 2–3 quarterly; Yr 4–end annual: ► [Appropriate granularity by period]
• Rent Rolls: ► [With tenant names, lease start and end dates]
• Price: ► [Purchase price]
• Price per unit: ► [Price per unit vs. market comparables]
• The many income sources: ► [All income sources shown in us$M]
• All expenses: ► [All operating expenses shown in us$M]
• Distributions: ► [Projected distributions by period in us$M]
• Net computations: ► [Net cash flow computations in us$M]
• Sensitivity analysis: ► [Occupancy; growth rates; milestone changes; floating rate loan adjustments]

↑Disclaimer:

Neither Prosper Systems (PS), nor its Founder, Kenton H Johnson, are licensed Real Estate or Lending Brokers, Securities Dealers or Investment Advisers. However, PS has an Attorney on its Team, and works closely with and engages other licensed individuals or firms as needed. PS makes no warranties or representations as to the quality of an opportunity, the integrity of any party, or the value of a given transaction. PS is acting only as Collaborator. All due diligence is the responsibility of Investors, Buyers, Owners and their Collaborators.

↑About Prosper Systems

Led by Kenton H Johnson, Prosper Systems is a Team of Business, Sales and Technical Operations Consultants with resources and talent to work with businesses and projects worth us$2M to $20M+.

Home  •  Resume  •  Brief (Refer & Participate)  •  CRE Due Diligence  •  Biz Due Diligence  •  Inexpensive Consulting (AI & Vetted Investors)  •  Group  •  Newsletters  •  Development & Finance  •  Buying/Selling  •  FINANCE Options LIST  •  Referral Income (to 20%)  •  PS Introduction  •  Schedule a Call

“Prosper Systems Finances, Develops or Sells Businesses for us$2M+, Projects for $20M+, and takes great care of Referrers.”

Copyright © 2016–2026, Prosper Systems, Denver CO USA. All rights reserved. Latest update: 05/09/2026, KHJ