Before buying commercial real estate, you need answers to five categories of questions: financial (is the income real?), physical (what will the building cost me?), legal (what am I actually allowed to do here?), tenancy (who pays the rent and for how long?), and market (why is this asset trading, and at what basis?). Deals die — or should have died — on questions nobody asked until after contract. This checklist is the full set Skyline Properties sees institutional buyers run on New York acquisitions, organized so you can work through it from first look to signed contract, with the NYC-specific traps flagged where the generic version of each question is not enough.
Financial questions: is the income real?
Start with the operating statement, and assume it flatters the building. What is the actual trailing-12 NOI, rebuilt from bank statements and leases rather than the marketing setup? What will property taxes be after the sale triggers reassessment — in NYC this single line item routinely swings 20%+ post-closing and is the most common source of overstated NOI. What are real vacancy and collection loss for this submarket, not the pro forma's 3%? What capital items has the seller been expensing — or deferring — and what reserves does a lender require?
Then interrogate the pricing: what cap rate does the price imply on the rebuilt NOI, and how does that compare to 12–24 months of closed comps? What is replacement cost, and are you above or below it? Work the numbers through the NOI calculator and cap-rate calculator, and pressure-test the answer with a Broker Opinion of Value before you commit to a number.
Physical questions: what will the building cost me?
Every physical question should end in a dollar figure that comes off your price. What is the age and remaining life of the roof, boiler/HVAC, elevators, and electrical service? When is the next facade inspection cycle (FISP, the every-five-year NYC requirement for buildings over six stories) and what did the last report flag? What is the building's Local Law 97 emissions position — compliant, buying credits, or facing a retrofit that can run into seven figures on older stock? Is there asbestos, lead, or a tank in the basement — and does the Phase I environmental recommend a Phase II?
Commission your own engineer's report; never rely on the seller's. On older Class B and C product, the physical answers frequently reveal that the real play is repositioning or land value rather than in-place income — which changes the entire pricing framework, as our red flags in NYC commercial properties breakdown shows.
Legal and zoning questions: what am I allowed to do here?
Title and land use kill more NYC deals than any inspection. Is title clean — and what easements, restrictive declarations, or ZLDAs (zoning lot development agreements) ride with it? What is the zoning, the maximum FAR, and how much of it is used — is there unused development potential or transferred air rights history? Does the certificate of occupancy match actual use, floor by floor? Are there open DOB violations, ECB judgments, or stop-work orders? Is the building in a historic district or landmarked, which changes every future alteration?
For multifamily, the regulatory question dominates: what is the true rent-stabilization status of every unit, verified against DHCR registration history rather than the seller's rent roll? Post-HSTPA, mis-grading a stabilized building as free-market is a half-of-value error. Read the NYC zoning guide and the rent stabilization guide before contract, not after.
Tenancy questions: who pays the rent, and for how long?
The rent roll is a list of promises; your job is to test each one. What are the lease terms, expirations, and renewal options — and what does the rollover schedule look like in years two through five? Are tenants paying — request 12 months of collections, not just the roll. What is each major tenant's credit, and are there personal or corporate guarantees? What concealed obligations ride with the leases — free-rent tails, tenant improvement allowances owed, exclusive-use clauses that constrain re-leasing, purchase options or ROFRs that cloud your exit?
Get estoppel certificates from every material tenant confirming rent, term, and the absence of landlord defaults. On retail, walk the trade area and test the sales-to-rent ratio; on office, ask what the tenants' actual utilization looks like — a leased floor a tenant never occupies is a non-renewal in progress.
Market and seller questions: why is this deal available?
Every deal has a reason it exists. Why is the seller selling, and why now — estate settlement, partnership dissolution, loan maturity, 1031 timeline, portfolio rebalancing? Motivation determines how negotiable price and terms really are. How long has the property been available, and has it been quietly shopped before? What did nearby comparable buildings actually trade for — including the off-market trades that never hit public databases? What is the submarket's trajectory: pipeline supply, rezonings like City of Yes, tenant migration patterns?
If the opportunity is off-market, an additional layer applies — verifying information without a marketed process's disclosures, and pricing without an ask. Our companion checklist of questions to ask before an off-market offer in NYC covers that layer, and our guide to verifying information on off-market NYC properties shows how to confirm what you are told.
How Skyline approaches these questions for buyers
Skyline Properties runs this checklist from the inside. Because our practice is off-market investment sales, we typically know the answers — the seller's real motivation, the regulatory posture, the capex history, where the true comps sit — before a buyer ever sees the opportunity. On the $135M sale of 6 East 43rd Street, the questions that mattered were conversion questions: floor-plate geometry, 467-m eligibility, and the residual math that supported 441 units. On the $65M 99-year ground lease at 236 Fifth Avenue, they were structural: rent resets, reversion, and financeability. The checklist is universal; the weighting is deal-specific.
Serious buyers can submit an acquisition mandate with their buy-box and diligence priorities; Skyline sources against it and arrives at the first meeting with the answers to the questions above already in hand.
Frequently asked questions
- What is the most important question to ask before buying commercial real estate?
- If you can only ask one: 'what will the property taxes and true NOI be after I own it?' In NYC, post-sale reassessment, real vacancy, market-rate management fees, and required reserves routinely reduce the seller's stated NOI by 10–20% — and at a 5% cap rate, every $100,000 of overstated NOI is $2 million of overstated price. Every other question ultimately feeds this one: what does this building actually earn, and what did I actually pay per dollar of it?
- What questions should I ask the seller directly?
- Ask why they are selling and why now; how long the property has been available and whether it has been shopped before; what capital work has been done and deferred; whether there are open violations, litigation, or tenant disputes; and whether any tenants hold purchase options or rights of first refusal. Sellers' answers are a starting point, not evidence — verify everything against documents: leases, DHCR registrations, DOB records, tax bills, and 12 months of actual collections.
- How long does it take to answer all these questions on an NYC deal?
- Pre-offer screening — financial rebuild, zoning check, comp review — takes one to two weeks with good information. Full contract-period due diligence on a mid-size NYC commercial asset typically runs 30–60 days: engineer and environmental reports, title and survey, estoppels, and regulatory verification. Complex assets (ground leases, conversion candidates, heavily stabilized multifamily) run longer. See our guide on how much due diligence time NYC commercial properties need.
- Do these questions change for an off-market purchase?
- The questions stay the same; the verification burden rises. Off-market deals come without an offering memorandum, so you build the fact base yourself: pull ACRIS records for ownership and liens, DOB and HPD records for violations, DHCR registrations for regulatory status, and insist on documents — leases, tax bills, bank-verified collections — rather than summaries. A broker who specializes in off-market transactions typically arrives with much of this assembled, which is a large part of what the representation is worth.