Property Acquisition Setup

Accounting Setup

Complete all items below after close of escrow.

Banking & AppFolio

1. Set up bank account
   Enable ACH and attach a voided check.

2. Add the new property into AppFolio/MRI
   Add the bank account into AppFolio/MRI. Add owners, investors, and loan information into MRI.

3. Add tenant information into AppFolio
   Upload all tenant leases into AppFolio.

4. Legal and entity setup
   Send EIN, Operating Agreement, and LLC-5 (CA & DE) to CPA. Add EIN and Secretary of State info into AppFolio. Confirm ownership info and Tax ID.

5. Confirm investor contributions
   Cross-reference with the Capital Raise Sheet. Handle acquisition due diligence cost reimbursement.

Utilities & Transfers

Transfer all utilities and registrations into the new ownership entity:

1. Rent registration
   Transfer Rent Registration / file New Ownership with HCIDLA.

2. Transfer utilities
   Gas, electric, water, telephone, and internet. Add all new utility account information to AppFolio.

3. Business tax
   Register for a Business Tax License. Attach the Temporary Business Tax Certificate into AppFolio and provide a copy to the Property Supervisor to post at the property.

4. Property tax
   Transfer property tax — enter APN into AppFolio.

Financial & Insurance

1. Mortgage
   Set up mortgage payments for ACH.

2. Deposit slips
   Order deposit slips for the onsite resident manager.

3. Section 8 (if applicable)
   Fill out the ownership transfer form and mail to HACLA.

4. AMEX card
   Order an AMEX card for the property.

5. Insurance
   Add the new property to the Insurance Excel Spreadsheet.

Leases & CAM

1. Abstract residential leases
   Input into AppFolio.

2. Abstract commercial leases
   Work with the Property Supervisor to abstract and input into AppFolio.

3. Create CAM breakdown
   Coordinate with the Property Supervisor.

Vendor Setup

1. Notify existing vendors
   Inform all vendors of new ownership and update the mailing address.

2. Enter new vendors into AppFolio

3. Confirm or establish service for each vendor type:
   Pool service, cleaning, gardening/landscaping, fire service, elevator service, pest control, security service, insurance, trash service, laundry, phone lines (intercom), and digital surveillance.

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Property Management Setup

Pre-Close

Complete before close of escrow:

1. Residential Property Report (9A)

2. As-builts
   Coordinate with Mario.

3. Design
   Coordinate with Sam.

4. Pest control
   Schedule inspections with Excellance and Farmer.

At Close

1. Issue Welcome Letter to all tenants.

2. Pick up files and keys from prior management or owner.

3. Send Tenant Info Sheet to collect all tenant contact information.

4. Re-key the building.

5. Build a Gantt chart / timeline for the full onboarding process.

In Office

1. Resident Manager
   Get Resident Manager info and unit number (if applicable). Coordinate a new Resident Manager contract.

2. AppFolio verification
   Verify lease and tenant profile pages are uploaded. Input any additional tenant contact information.

3. Access codes
   Input lockbox info into AppFolio: location, code, and which keys are inside. Enter gate code and garage clicker code into the AppFolio Property Info Spreadsheet.

4. Lease review — attorney’s fees
   Review all leases for attorney’s fee clauses. Note any not limited to $500. Issue notice to change terms if needed.

5. Lease review — parking
   Review all leases for parking assignments. Obtain a parking map from the Resident Manager.

6. Elevator
   Verify Elevator Permit / Certificate of Compliance. Take pictures.

7. Service contracts
   Review laundry, pool, and all other service contracts. Note expiration dates and mandated non-renewal notice periods.

8. ADA survey (if needed)

9. Utilities
   Document each house account number, how many house meters (gas, electric, water), and the location of water and gas shutoffs.

10. AppFolio alerts
    Set up alerts for all recurring items: smoke detectors, fire, laundry, trespass, etc.

Property Walk-Through

1. Install lockbox.

2. Create a property map using the ALTA survey. Mark all meters (gas, electric, water), shut-off valves, elevator/electric rooms, laundry room, IT and lockbox locations, trash/recycling bins, sump pumps, pool, and roof access/ladder.

3. Draw a parking lot map. Note any numbering or lettering.

4. Unit inspections
   Check functionality, smoke detectors, and severe damage in each unit.

5. Post required notices
   Rent Registration Certificate on every tenant door and in common areas. Coda Management sign. Business Tax License (post a copy only, not the original). No Trespass sign — also file with LAPD. Equal Opportunity and Hazard Chemicals Posting (Prop 65).

6. Check building systems
   Laundry room, intercom system, and elevator. Note brand and service company for each. Input into AppFolio.

7. Secure water access
   Lock hose bibs. Lock backflow if there is a cage — note if there is no cage.

8. Photography
   Take photos of the entire property. Upload to publisher and create a property booklet.

Schedule Vendors

1. Fire service
   Schedule extinguisher expirations, fire alarm testing, and standpipe testing. Provide fire system details including number of extinguishers.

2. Reprogram intercom.

3. Schedule property/building cleanup.

4. Schedule low-flow fixture check (toilets).

5. Check and schedule backflow device.

6. Review inspection reports
   Schedule any required maintenance including hydrojetting.

7. Seismic retrofit (if applicable).

8. Address property violations (if needed).

9. Renovations / CapEx work
   Obtain bids from 3 general contractors.

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Due Diligence

Use the sections below during the acquisition due diligence period.

General

Confirm the following for the subject property: year built, current zoning, building size, site size, and parking provided.

Environmental

Tip

Save all environmental diligence documents to the server.

Phase I report (obtain contact info), Phase II report (obtain contact info), asbestos/mold sampling, existing environmental report from Seller, remediation plan (if applicable), and soil samplings.

Property

Tip

Save all property diligence documents to the server.

Obtain or prepare: Property Condition Report, copy of site plan (scaled blueprint), site plan and parking plan for the entire project, as-built drawings, roof integrity assessment, summary of project physical problems and tenant issues, summary of deferred maintenance issues, color palette for anchor and shops, copies of all tenant floor plans and working drawings for all buildings, copy of zone code, copy of parking code, and location of meters, shut-off valves, timers, and controls.

Financial

Obtain or prepare: current budget, CAM reconciliations, budget prepared by our property manager (set up in AppFolio), schedule of any unpaid TIs or LCs (if applicable), three-year history of capital expenditures, utility invoices (12 months), copy of rent roll, management fee reimbursement analysis, and NNN cap analysis.

Signage

Obtain sign bids and implement sign program (perimeter and storefront). Allocate panels and assess merits of leasing vs. sale (tenant pro rata share). Review all leases to determine if any tenants have perimeter sign rights. Obtain sign ordinance, sign dimensions/concept drawings, and assessment of maximum obtainable perimeter signage (pylon or monument) through sign company.

Leasing & Loan

Confirm lease listing agreement(s) are in place. Obtain gross sales reports from diligence if available. Obtain and review all loan documents.

Documents & Records

Core Documents

Obtain or prepare: copy of HVAC maintenance contracts (currently in effect), ADA (CASP Survey), lease abstracts, books for rent and CAM billing, complete set of leases, pictures/aerials/maps/city profile/promotional materials, litigation claims (if any), operating budget, income/expense summary (past 3 years), and evidence of all percentage rental paid.

Tenant Analysis

Prepare: summary of tenant exclusives under use clause, go-dark, and co-tenancy requirements. Summary of tenant options, first rights to acquire property, and early termination provisions. Summary of security deposits (total and breakdown). Summary of property tax and insurance due tenant by tenant (past 5 years). Copy of CAM billings broken down by tenant. Tenant billing files.

Contracts, Permits & Insurance

Obtain: copy of check ledgers (2 years) and review. All existing service contracts and warranties (HVAC, roof, etc.). Existing management agreement. CC&Rs. Appraisal (if available). Merchants Association (if active). Anchor’s financial statements (if available). Insurance invoice and policy. All permits, Certificate of Occupancy, variances, or Conditional Use Permits (if applicable). Personal inventory (if any). Brokerage/listing agreements pertaining to the transaction. 5-year loss history from insurance carrier.

Note

For required capital expenditures, request a discount on price per PSA.

Contact List

Maintain a contact list for every acquisition with name, firm, phone, and email for each role: Attorney (Buyer), Attorney (Seller), Seller’s Broker, Buyer’s Broker, Leasing Broker (Current), Leasing Broker (Prospective), Mortgage Broker, Title Representative, Escrow Officer, Current Property Manager, Environmental Consultant, Surveyor, Architect, and ADA Consultant.