One of the easiest ways to lose money in real estate isn’t the purchase price but it's what you can miss during the due diligence.

It's excited to get a deal. You analyzed, ran numbers and walked it.

The numbers might make sense. Initial analysis checks the box.

But what separates a good deal from a bad one is what happens after you go under contract.

This is where the fund begins and what's vital in closing or not.

What Is Due Diligence?

First let's get to the basics, what does due diligence means when you are purchasing a property?

It is where you take a deeper look. Often the initial viewing you are not as detailed and missed things. Maybe you had emotions playing a part into it. Either way the due diligence period is the time to inspect.

Now, what will you look deeper into?

1. Condition
2. Comps, ARV
3. Market Rent
4. Location, Neighborhood
5. Timeline, Plan

With these in mind let's break it down.

Property Condition

This is straight forward but a huge piece is understanding the condition. You might have saw some glaring items during the viewing but need to go deeper.

One of the best ways is to hire a inspector and bring any contractors if needed. Don't wait till you close to do these.

Inspector will look deep into every detail and they can show that issues such as:

• foundation issues
• roof problems
• outdated electrical
• sewer clogged or cracked
• HVAC not running

Those can completely change your numbers.

It’s not uncommon for rehabs to go 10–20% over budget if these weren't checked.

Why it matters: Your entire deal can shift based on what you uncover here. If issues come up adjust numbers and pivot.

Comps (ARV)

Initially when you are viewing a deal you should look at comps but you still need to relook at this.

Also compare comps with the scope of work proposed. Does your finishes match the intended ARV?

Focus on these when reviewing comps:

• layout, bed/bath count
• homes within the neighborhood
• finish level and what finishes

all play into value.

A 5–10% miss on ARV doesn’t sound like much, but in most deals that’s the difference between profit, breaking even or losing $$.

Rent Comps And Competition

For rentals or BRRR deals, this is just as important as ARV.

There's a few ways I would dive deeper on potential rent, how long it'll take to lease and the overall feel of the pocket:

• look at Zillow within the zip code, area
• how long the neighboring ones are listed
• ask a few property managers
• use rental software programs

Each will give you a piece into the puzzle. Each are important to understand the property you are considering.

Why it matters: Overestimating rent or not understanding the supply can turn a good deal into a bad one.

Location , Location, Location

This is the old saying in Real Estate but it is true. Many deals look wonderful on paper but the location says otherwise.

You can have:

• one block that sells quickly
• another that struggles

Things like:

• nearby commercial
• traffic
• surrounding property condition
• large dogs next door

all matter more than people think.

Why it matters: Location is something you can't change, you are stuck with the neighbors and surrounding development.

What's Your Plan?

This one gets overlooked a lot.

How long will the rehab take? How long will it sit on market? What’s your backup plan if it doesn’t sell?

Right now, homes are averaging around 50+ days on market, which is longer than what many investors got used to over the past few years.

That directly impacts holding costs, each week draws out your cost.

Why it matters: Time = money. Holding costs add up quickly.

Where People Go Wrong

Most mistakes come down to one thing - assuming. Even with doing many projects assumptions can bite you.

Due diligence isn’t just a step in the process, it’s where you dive into the details.

The investors doing well right now aren’t guessing.

If a deal only works when everything goes perfectly, it’s probably not a great deal.

Due diligence is your chance to find that out before it costs you.

Whether you’re investing, buying, or selling in Kansas City, taking the time to properly analyze a property can make the difference.

If you ever want a second set of eyes on a deal or help walking through numbers in the Kansas City market, I’m always happy to connect.