Buying well is not a matter of intuition. It is a matter of method, facts and technical due diligence that allows you to know exactly what you are buying, how much it will cost to bring it up to standard and how it will impact your profitability.
At Borneo Advisors, we support private investors and family offices so that every decision is based on technical evidence, not assumptions.
What is technical due diligence (and why it determines half the outcome)
We are referring to the set of technical, construction and installation reviews that determine the actual condition of the asset, its operational risk and the CAPEX required in the short, medium and long term. The objective: to avoid surprises after signing, negotiate price and clauses on a sound basis, and prioritise investments that preserve cash flow.
In our work as real estate consultants in Madrid, we integrate technical advice with financial analysis and negotiation, so that the report is not just a nice-looking PDF, but a roadmap that changes the price, schedule and guarantees of the contract.
What questions should your due diligence answer?
Before going into detail, it is important to know what answers you need in order to make a confident decision.
- What is the structural condition and condition of the building envelope?
- What critical risks and unavoidable costs exist in the next 24 months?
- What recurring CAPEX does the asset require to sustain its NOI?
- Are there any regulatory breaches or accessibility/security breaches that require mandatory action?
- How does all this affect the price, the terms and the guarantees?
Scope of rigorous technical advice
The depth of the analysis is tailored to the size and use of the asset, but there are certain minimum requirements that cannot be waived. We begin with an overview and then drill down into each technical aspect.
1) Structure and envelope
The structure is the backbone of the asset. We are interested in its current load-bearing capacity, pathologies (cracks, damp, corrosion) and expected useful life. In the envelope, we review the roof, facades, carpentry and thermal bridges that impact energy efficiency and comfort.
2) Facilities
Electricity, air conditioning, plumbing, sanitation, fire safety and lifts. We assess regulatory compliance, technological obsolescence, sizing and replacement costs. A non-standard installation can ruin a releasing plan.
3) Technical and regulatory compliance
Accessibility, safety, licences, fire protection, and compatibility of use. An asset with “minor” non-conformities may require mandatory works that change the IRR.
4) Energy efficiency and ESG
Energy certification, opportunities for improvement in building envelope and installations, and return on investment (savings in consumption, increase in income or reduction in vacancy rates). This is where part of the yield on cost of a value-add is decided.
5) Capex by horizons
We classify immediate CAPEX (0–24 months), cycle CAPEX (3–5 years) and strategic CAPEX (when there is a change of use or repositioning). Without this, Excel lies.
Working methodology: how to execute without losing focus
Technical advice adds value if it avoids bias and translates findings into financial and contractual decisions. This is the path we follow.
Technical visit and equipment checklist
Before deploying specialists, we align the usage programme and material risks. The visit is guided by a checklist that prioritises changes to prices or clauses.
Testing and documentation
We gather information through measurements, visual inspections and, where appropriate, sampling and testing. We request the building logbook, certificates, maintenance contracts and incident records to cross-check data.
Risk matrix and CAPEX budget
Each finding is assessed in terms of probability and impact, and translated into a CAPEX item with a range of costs and deadlines. This feeds into the financial model and the negotiation strategy.
Executive report and technical appendices
The deliverable separates the decision (executive summary, figures, and recommendations) from the evidence (appendices, photos, essays), so that the committee and operational teams can work without wasting time.
How due diligence changes price, schedule and contract
The technical report serves to negotiate with facts. This is where technical advice translates into euros.
Price adjustments
Pathologies or unavoidable CAPEX justify adjustments: direct discount, holdbacks or retention guarantees until critical works are completed.
Conditions precedent
If a risk depends on authorisation, licensing or test results, it is negotiated as a condition precedent. Protect your position without blocking the process.
Closure schedule and milestones
When immediate works are required, the payment schedule must be aligned with technical milestones (project approval, commencement of works, certifications, commissioning).
Guarantees and responsibilities
Representations and warranties, liability periods and indemnity limits associated with hidden defects, installations or compliance are defined.
Common mistakes that increase risk (and how to avoid them)
A line to put this into context: these errors are repeated and have a real cost in terms of money and time.
Close quickly with incomplete report
The rush not to lose the asset creates selective blindness. It requires minimum scope and evidence for each conclusion.
Confusing maintenance with investment
Deferred operating expenditure is not strategic CAPEX. Classify it correctly so as not to mislead the cash-on-cash of the early years.
Ignore usage compatibility
Ambitious layout changes or releases may require accessibility, PCI, or ventilation work that was not on the radar.
Do not link price to findings
If the report is not included in the contract, it is a PowerPoint presentation. Each risk is addressed in a specific clause or adjustment.
Brief case study: tertiary asset with hidden risks in facilities
Situation: building in a good location with below-market rent. It was marketed as “ready for repositioning”.
Technical findings: obsolete air conditioning with recurring repair costs, partial PCI compliance and envelope with leaks at the crown.
Strategy: risk matrix with immediate and cyclical CAPEX, negotiation of retention until commissioning of new air conditioning and price adjustment for envelope repair.
Result: closure without surprises, work completed before the release and yield on cost within the target range.
KPIs and tools to make the technique visible in the figures
It is not enough to simply “have reports”. You have to measure the real impact on profitability.
- CAPEX backlog by asset and time horizon (0–24, 36–60 months).
- Compliance index (accessibility, PCI, licences).
- Average resolution time for critical incidents.
- Energy efficiency (base consumption before/after interventions).
- Deviation between budgeted CAPEX and executed CAPEX by item.
These indicators feed into committees and rebalance the portfolio towards assets that multiply each euro most effectively.
How we integrate technical advice into your purchase
Our approach is designed for private investors and family offices who want speed with rigour:
- We define the scope and key questions before stepping onto the asset.
- We carry out technical due diligence with a focus on what affects price, deadlines and contracts.
- We translate findings into CAPEX by horizons and into negotiable clauses.
- We align the closure schedule with technical milestones, avoiding subsequent friction.
- We deliver an executive summary that the committee can approve in minutes and a technical annex that guides construction and maintenance.
The result: lower-risk purchases, more predictable cash flow, and a solid foundation for releasing and repositioning.
Do you want to shop safely from day one?
If you are valuing an asset and need certainty about construction, compliance and CAPEX, we put our team to work so that you can negotiate with facts and close with peace of mind.
Schedule a consultation and we will put together the due diligence your investment requires.
Frequently asked questions about technical advisory & due diligence in acquisitions
What does a “minimum” technical due diligence cover?
Structure/envelope, MEP systems, code compliance (accessibility, fire safety, permits), energy efficiency and horizon-based CAPEX. That’s enough to set price, schedule and warranties.
How does engineering turn into negotiable euros?
Each finding maps to a CAPEX line and a clause: price adjustment, holdbacks, conditions precedent or milestone payments—protecting returns and closing timing.
When should I expand scope (probes, tests, cameras)?
With recurrent defects, change of use, or demanding value-add plans. Early sampling prevents overruns and defends projected yield on cost.
Which documents should I request to speed things up?
Building logbook, system certificates, maintenance contracts, incident logs and permits. A clean data room streamlines real estate consulting and financing.
How does DD feed the financial model?
Update NOI, cash curve and cash-on-cash with immediate (0–24m) and cycle (3–5y) CAPEX. If IRR falls below the conservative case, renegotiate or walk.
What technical red flags often drive overruns?
Aging HVAC, partial fire compliance, roof/façade leaks and pending accessibility. They shift timelines and opex unless addressed pre-closing.
How do I sync lender terms with the SPA to avoid delays?
Match LTV, hedges and drawdowns to technical milestones (design, start, commissioning). A strong bank letter supports price and reduces counterparty friction.
Difference between maintenance and strategic CAPEX?
Maintenance restores standard; strategic CAPEX lifts rent/occupancy or enables use. Mixing them inflates IRR “in Excel” and hurts real cash.
Which KPIs matter post-acquisition?
CAPEX backlog, compliance index (access/fire/permits), mean time to resolve critical issues and baseline energy use—evidence your asset management is creating value.
