Due diligence is one of the most essential parts of the purchasing process.  This is your one shot to find out every little detail there is to know, about the property you want to buy.  It's the process that will ultimately lead to your decision to either move forward with an offer of acquisition, or to pass on to the next deal.  Let's briefly discuss the two areas that need to be evaluated before making an offer to purchase.  During the due diligence period, there are two aspects of any property that need to be reviewed: (1) the financial records of operations, & (2) the physical property.  Both are very important.

FINANCIAL BOOKS & RECORDS
Performing due diligence of the operations requires you to thoroughly review every aspect of the property's books and records.  This is where a skilled real estate accountant can help.  You will want to verify every aspect of the properties financial records before making a decision to purchase.  Additionally, you will be using the information gathered during this due diligence process to start formulating your thoughts as to operations for a budget, by categorizing the property's income and expenses.  Reviewing the books and records are a historical review of how your property has performed (good or bad).

PHYSICAL PROPERTY
Physical due diligence requires you to inspect every aspect of a property.  This is probably the time you will want to make a property inspection with your maintenance expert, or pay to have an expert create a report for you.  It is wise, that you walk every square inch of your property, so that you can observe both the exterior and interior of the building.  You may also need to have your maintenance professional take a look for anything that might have to be repaired or replaced once you take over ownership of the property.  This is your time to request that these items be either repaired before a change in ownership takes place, or to be discounted from the purchase price.