Houston Multifamily Due Diligence Checklist: 12 Things to Do Before You Close on Any Pre-1990 Apartment Building
Most investors doing their first multifamily deal in Houston spend their due diligence budget on the general inspection and call it done. Then they close and spend the next 18 months finding out what the inspection missed.
This list exists because of those deals. Not theory. Actual line items that have cost Houston investors real money on properties exactly like the one you're probably looking at right now.
If you are buying a 1960-1990s wood frame multifamily in Houston run every single one of these before you close. No exceptions.
1. Sewer Scope the Main Lines
Budget $300 to $500 and hire a plumber to camera every main line. Cast iron from this era deteriorates from the inside out and looks completely fine until it doesn't. Significant deterioration is $100,000 or more in negotiating leverage, or a reason to walk entirely.
2. Pull City of Houston Permits
Verify every claim the seller makes about improvements. Check for permitted work on electrical, plumbing, and HVAC. Unpermitted renovations become your liability the moment you close. If the seller claims a five year old roof but no permit exists that is a red flag worth pressing hard on.
3. Get an Insurance Quote Before Due Diligence Ends
Do not wait until after closing to find out what insurance costs. A 1960 built wood frame 14 unit in zip code 77016 can come back at $32,000 to $38,000 annually. That number alone can swing your NOI by $7,000 to $12,000 and completely change whether the deal works at your offer price.
4. Ask About Section 8 Tenants Upfront
It affects your rent upside model, your turnover assumptions, and how you underwrite vacancy. HAP contracts have their own timelines and rules. Know exactly what you are inheriting before you are legally obligated to inherit it.
5. Inspect Every Electrical Panel
Federal Pacific and Zinsco panels are fire hazards and virtually uninsurable. Budget full replacement and treat it as non-negotiable. Also check for double tapped breakers, aluminum wiring, and any panel that has been DIY'd by someone who had no business touching it. This inspection should be done by a licensed electrician not a general inspector.
6. Walk Every Unit — No Exceptions
The one unit you skip is the one hiding a collapsed subfloor, mold behind the vanity, or a tenant running something you do not want to inherit. Document everything with photos and video. Every unit. Every time.
7. Review All Leases and Rent Rolls Side by Side
Cross reference what is on the rent roll against actual signed leases. Look for verbal agreements, month to month tenants, relatives of the owner, and anyone whose rent has not moved in five or more years. These issues affect your value add timeline more than the renovation does.
8. Verify Actual Water Bills — Not Estimates
Owner paid water on a 1960 building with 14 units and aging fixtures can run significantly higher than what shows on the trailing 12. Pull 12 months of actual utility bills directly from the city. Leaking toilets and fixtures with no aerators in older units add up to real money every month.
9. Foundation and Drainage Assessment
Houston clay soil is unforgiving. Look for stair step cracks in brick, doors that will not close properly, and sloping floors. A foundation inspection runs $300 to $500 and is the cheapest insurance you will buy on this deal. Also check drainage around the building, poor grading on a 60 year old property means water intrusion every storm season without exception.
10. HVAC Inventory and Age
List every unit's system, type, age, and condition. Window units are easy to replace. Central systems on a 1960 building may be original or cobbled together from three different decades of repairs. Budget $3,000 to $5,000 per unit for replacement and assume several will need it within the first 24 months of ownership.
11. Talk to the Tenants
Knock on doors. Introduce yourself as someone evaluating the property. Tenants will tell you things the seller never will, how long they have been there, what has been broken for months, whether maintenance ever shows up, and which units are the real problems. This conversation costs nothing and is worth more than half the items on this list.
12. Confirm Ownership and Title History
Run a title search and check for liens, code violations, and judgments attached to the property. Houston has seen a significant rise in mechanic's liens on older multifamily from unpaid contractors. Make sure what you are buying is actually clean before you wire a dollar.
Due diligence is not a formality. It is the only moment in the entire transaction where the information asymmetry shifts in your favor. Use it.
If you want someone to walk this process with you on your next Houston multifamily deal before you commit to it, let's talk.
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