Avoiding Million-Dollar Mistakes: Inside Our Due Diligence Process

By Chris Hanson, Founder, Hanson Capital

When it comes to investing in real estate, details matter—especially during the due diligence phase. At Hanson Capital, we follow an 83-step checklist every time we put a deal under contract. Why? Because missing even a single critical detail can turn a promising investment into a costly lesson.

What Due Diligence Really Means

Due diligence isn’t just a line item in the transaction process. It’s a rigorous, repeatable workflow that we’ve refined over 20 years and across six states, dozens of property types, and more than two decades of acquisitions experience. Every asset we acquire goes through the same comprehensive vetting process.

Real Numbers, Real Selectivity

In Q2 of 2025 alone:

• Sent over 5,800 deal flow emails to brokers
• Made 113 deal flow calls
• Received 2,146 investment opportunities
• Fully underwrote 101 of those investment opportunities
• Wrote 2 offers
• And closed on just 1 property

This shows how selective we are. Of the 2,146 deals received, only 4.7% met our initial investment criteria and were fully underwritten.  Of those deals that were fully underwritten, less than 2.0% met our minimum return thresholds, which equates to .09% of all deals received.  This underscores the importance of knowing exactly what you’re buying—and why.

The Phases of Our Due Diligence Process

Each step in our due diligence process is logged and tracked in Asana, our task management platform, and broken into five distinct phases:

1. Investment Committee (9 Steps)

Deals that meet our 15% IRR minimum threshold are brought before our investment committee. Every Wednesday, we review up to 10 potential acquisitions and only advance the best.

2. Contract Drafting (16 Steps)

This phase includes everything from negotiating tenant improvement (TI) bids with asset management to gathering real quotes that move us from projections to real-world numbers before we’ve even closed.

3. Opening Escrow (5 Steps)

Straightforward but essential: signed contract, title delivery, and earnest money deposit.

4. Due Diligence (26 Steps)

This is the core of the process and includes:

• Environmental inspections
  
• Surveys
  
• Legal reviews
  
• Vendor walk-throughs
  
• Confirming ingress/egress requirements
  
• Title work and ALTA surveys

These steps are not necessarily linear, but every single one must be completed before we move forward.

5. Closing Escrow (30 Steps)

We secure financing, finalize equity commitments, and prepare the handoff to our asset management team—all while ensuring compliance across legal, investment, and operations.

Why This Process Matters

If even one component of our checklist is skipped, the financial risk can be enormous. In fact, we’ve seen it happen.

Recently, we learned that a neighboring parcel to our Buckeye, AZ site had been sold to a manufacturing group that failed to confirm their access rights. The result? They effectively bought landlocked acreage—what I would call “an island.” Had they used a checklist like ours, this multimillion-dollar misstep could’ve been avoided.

A System That Builds Confidence

This 83-step due diligence process isn’t just about risk management—it’s about confidence. Confidence for our team, for our lenders, and most importantly, for our investors. Because when we deploy capital, we do it knowing that every box has been checked and we are doing everything we can to minimize risk.

Ready to Invest with Confidence?

At Hanson Capital, we don’t leave real estate success to chance. Our disciplined approach is built for long-term performance, not short-term speculation.

If you’re curious about how our approach could fit into your portfolio, visit our website or schedule a call to connect with our team. We’d love to talk through what we’re seeing and where we’re going next.