Are you planning to buy or finance commercial or industrial real estate? the mall? office building? Restaurant / banquet facility? parking? Display window? garage? Manufacturing facility? deposit? Logistics terminal? Medical building? Nursing home? Hotel / motel? pharmacy? Banking facility? The field of sports and entertainment? other?
The key to investing in commercial real estate is to make the right due diligence, make wise investment decisions and make sure you understand all the important facts for calculating the expected return on investment. ..
The following checklist is designed to help you conduct a meaningful and focused due diligence survey.
Basic Principles of Due Diligence:
Trading commercial real estate is different from buying a large home. Warning Empter: Have the buyer take care of you.
Consumer protection laws that apply to home purchases rarely apply to commercial real estate transactions. The rule that a buyer must examine, evaluate, and prove himself applies to the purchase of commercial real estate. Visit:- https://tacdat.com.vn/
Appropriate Care: “Such degree of care, activity, or attention that is appropriate to expect from a reasonable and prudent [person] and is usually exercised by him in certain circumstances. Absolute criteria It depends, not measured on. About the facts. Family in special cases. ” Black Law Dictionary; West Publishing Company.
Contractual statements and warranties are not a substitute for due diligence. Violations of statements and guarantees = proceedings, time and money.
What kind of safety is explained?
The scope, strength, and focus of a commercial or industrial real estate survey depends on the purpose of the party conducting the survey. These objectives may vary depending on whether the survey is (i) conducted in the interests of the strategic buyer (or long-term tenant). (Ii) Financial purchaser. (Iii) Developer; or (iv) Borrower.
If you are a seller, you need to understand that your buyer (and your lender) needs to solve all the problems that are important to your purpose. General purpose:
(I) The “strategic purchaser” (or long-term tenant) must acquire the property for its own use and ensure that the property is suitable for its intended use.
(Ii) “Financial buyers” need to acquire real estate for the expected return on investment generated by the flow of income from the real estate and determine the amount, speed and sustainability of the flow of income. Sophisticated financial buyers are likely to calculate revenue based on discounted cash flows rather than inaccurate capitalization rates (“capitalization rates”), which requires sufficient financial information.
(Iii) “Developers” typically seek to add value by altering the nature or use of an asset, using short- to medium-term exit strategies to dispose of the asset. However, the developer may plan to maintain the property as a long-term financial purchaser after development or refurbishment. Developers need to focus on the question of whether planned character changes will be made and whether their use can be beneficially achieved. Developers conducting due diligence focus on issues related to market demand, access, usage, and finance.
(Iv) The “lender” seeks to establish two basic loan requirements.
“Repayment capacity” means the real estate’s ability to generate sufficient income to repay a loan on time. When
2. “Collateral validity”: The target value of collateral in the event of loan default. Make sure you have enough money to repay the loan, maintenance costs, and recovery costs if you need the loan.