Due Diligence Inspections are Crucial for Affordable Property Acquisitions

Due diligence inspections are a must if you are acquiring or have just acquired an affordable property or a conventional property with affordable units. For owners and managers, reducing the risk of non-compliance and mitigating the liabilities via inspections can save millions of dollars in fines and penalties. That risk is high because there are many routes to non-compliance that owners and operators might not be aware of. “Call them landmines waiting to explode,” says Clark Crowther, Director of Asset Management at RealPage Compliance Services (formerly Windsor Compliance). “Anyone who has had a Department of Justice suit brought against them or has received an IRS notice of recaptured tax credits can confirm that housing laws can change. A property may be in compliance one year and out of compliance the next. Our team is dedicated to defusing those landmines pre-and post-acquisition.” RealPage Compliance Services provides compliance monitoring services for all types of affordable properties, including Low-Income Housing Tax Credit properties (Section 42), tax-exempt bond, Section 8, HOME, HUD, and Rural Development properties. Crowther’s group oversees inspections for over 1,000 properties every year. The physical side of multifamily due diligence inspections A physical, on-site inspection is a critical part of multifamily due diligence reviews. This is true even though inspections mostly revolve around ensuring that the property is in good fiscal condition, the files are in compliance, the residents are qualified to live there and the management company is following good practices. But nothing highlights the importance of reviews quite like physical reality. “This might be an extreme example, but we need to make sure that the physical asset is still there and standing, that the buildings are being taken care of,” says Crowther. “A lot can change in a property in a 12-month time period. There are several stori...