🧠 Due Diligence Cheat Sheet: 4-Unit Income Properties (California Edition)
If you're meeting with a 4-unit property owner—or representing a buyer considering one—having the right questions at your fingertips makes all the difference. This Due Diligence Cheat Sheet is your go-to resource for staying sharp and thorough, whether you're having a casual coffee chat or sitting down for a formal review.
✅ Grouped by topic for quick access
✅ Covers financials, tenants, compliance, repairs, and more
✅ Includes California & South Pasadena-specific tips
Key areas covered:
Rent roll, leases, and tenant history
Utility structure and other income streams
Capital improvements and open violations
Soft-story retrofits, insurance claims, and zoning checks
Management, turnover trends, and service contracts
Sale logistics: 1031 exchange, disclosures, timing
🔍 Bonus: If you're in South Pasadena, we've included reminders to cross-check rent control rules, seismic retrofit deadlines, and local code enforcement records.
📄 Want a printable checklist version or a version tailored to your city? Just ask — I'm happy to customize it to fit your real estate workflow.Below is a “due-diligence cheat-sheet” you can keep handy when you sit down with an owner of a 4-unit income property in California. I’ve grouped the questions by topic so you can pick and choose quickly depending on how formal (or casual) the conversation is.
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1. Income & Expenses
1. Current Rent Roll
• Can I see the rent schedule with unit numbers, tenant names (or codes), move-in dates, current rent, deposits held, and any concessions?
2. Historical Financials
• Do you have trailing-12 and preferably three-year operating statements?
• Any extraordinary (non-recurring) expenses I should adjust for?
3. Utility Structure
• Which utilities are paid by the owner vs. tenants?
• Are units individually metered or RUBS-billed?
4. Other Income
• Laundry, parking, storage, solar credits, pet fees—how much and how collected?
2. Leases & Tenants
5. Lease Documents
• May I review all written leases, addenda, and house rules?
6. Rent Control / AB-1482 Compliance
• Is the property exempt from California statewide rent caps? If not, have annual rent-increase notices and Just Cause forms been served properly?
• (South Pasadena has its own Rent Stabilization Ordinance—have any limits or registrations applied?)
7. Tenant Profiles & Delinquencies
• Any tenants behind on rent, on payment plans, or with eviction history?
8. Security Deposits
• How much is being held, in what account, and will deposits transfer at close?
3. Physical Condition
9. Recent Capital Improvements
• What major systems have been repaired or replaced in the last 5 years (roof, plumbing, electrical, HVAC, soft-story retrofit)?
10. Open Permits or Violations
• Any open City of Pasadena code cases or LA County Health department citations?
11. Seismic & Retrofit Requirements
• Has the soft-story screening been completed and, if triggered, is retrofit finished or pending?
12. Environmental Issues
• Any known mold, asbestos, lead paint, underground tanks, or seismic gas shut-off deficiencies?
4. Legal & Compliance
13. Unit Legality & Zoning
• Are all four units legally permitted? Any unpermitted additions or garage conversions?
14. Insurance Claims & Premiums
• Have there been insurance claims (water, fire, liability) in the last five years? What’s the current premium and carrier?
15. Short-Term Rentals
• Any licenses or prior violations for Airbnb/VRBO use?
5. Operations & Management
16. Management Structure
• Is the building self-managed or under a third-party contract? Terms of that contract?
17. Maintenance Vendors
• Who handles routine maintenance and turnover? Any service contracts that must be assigned or canceled?
18. Turnover History
• Average tenancy length and typical make-ready cost/time?
6. Sale Logistics
19. Disclosures & Reports on Hand
• Do you already have a recent appraisal, inspection, termite, or sewer-scope we can share with buyers?
20. Timing & 1031 Intentions
• Is the seller in a 1031 exchange or otherwise constrained by a timeline?
21. Preferred Terms
• Is there any rent-back, seller financing, or other term that would help you in negotiations?
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Quick tip
Because you’re in South Pasadena, be sure to cross-check anything the seller tells you against:
• The South Pasadena Rent Stabilization Program (registration, notice requirements, and relocation fees).
• LA County soft-story retrofit deadlines and any local seismic gas-shut-off mandates.
• Pasadena Public Records portal for open permits and code violations.