How To Obtain Accurate Numbers From The Seller For Your Evaluation!
Make sure you don’t make an offer on a property that doesn’t meet the target criteria.
Plus, you'll also learn:
- Two of my go-to sources for high quality, accurate data.
- How to best approach off market opportunities without wasting your time working with the wrong types of sellers.
- The #1 thing to understand about the person presenting the deal that determines your negotiating power.
- and more...
When it comes to obtaining the proper information to evaluate a transaction it is important to consider the source. If you were going to be acquiring value add assets, often times you’ll be able to do that on an auction platform such as TenX they will typically have excellent due diligence including operating statements, leases, rent rolls as well as market demographic data that can help you understand out of market properties as well as the clientele that it will serve.
They will usually be offering memoranda, pictures of the property as well as details of the two storage operating performance, any unique features and much much more.
When dealing with properties that are listed by brokers, there’s a specific format of due diligence information that they realize that they must collect before bringing a properties market. This includes historical financial data, information regarding the physical structure such as it size, vintage type of construction and its zoning classifications. In addition to that they will talk about market data but they may spend too much time on it as a way to distract you into being attracted to the marketplace while the asset may not necessarily be as attractive. You have to understand the motive of the person that is presenting the information.
Finally when dealing directly with off market properties that are going to be represented by the seller themselves, the information is likely to be far less organized and far less complete. In addition to that it will be important for you to do Strict and detailed underwriting. Meaning that you’re going to fit all of the income and expenses to make sure that it is accurately represented. It is not uncommon for sellers to make honest mistakes, or even two over state their revenue while under stating their expenses. The rule here is that due diligence in commercial real estate takes time make sure that you give yourself adequate time to conduct proper due diligence. Usually a minimum of 30 days with extensions for up to 60 or 90 days.
