Thread by @EstateRanger

So last week I explained how to find a Real Estate deal. (See below if you missed that)

Now I will be showing you what happens after you submit your LOI.

https://twitter.com/EstateRanger/status/1179388483900715009?s=20

Disclaimer:

This is for commercial real estate not residential

The transaction process changes by state.

There is a lot of things involved when purchasing a building. Don't expect everything to be here.

This is a thread on the basics. Don't kill me if I forget an item.

Getting under contract:

Everyone does their contracts differently. I almost always just send a Purchase and Sales agreement to the seller.

My main clause I always include:
30 day Due Diligence period after which I lose my deposit.

Walk away free within 30 days.

Once the timer starts ticking its time to get to work.

I always focus on the make or break part of the deal first.

For example, if I am worried about a roof I always look at the roof before ordering other inspections.

I do this to save money.

Make sure you have a lawyer when going through Due Diligence.

It is technical, document-intensive and if you don't have a lawyer you need one.

Your lawyer will pull a lot of the legal documents for you

Don't forget how expensive this process is. For a smaller newish building expect to pay around 10-20k.

For an older building that maybe needs a lot of work expect to pay up to 70k but usually around 40K-50K

You might ask why is it so expensive.

Here are some Costs:
Bank fee:1-2% of the loan
Environmental Inspection
Structural Inspection
Lawyer fees (Mine is 400 an hour)
Survey
Title Pull

And many more

My Process:

I am very detailed I like to have all my potential expenses laid out so I can request extra money in my loan for any repairs I have.

Typically called dry powder.

First thing:

I call all my banks I use. Send them the details of the deal. I also tell them that CAPEX estimates are coming and I would like some dry powder for the loan.

The banks appreciate time. Therefore I give them all the time I can. Hence why I reach out first

Next I bring my General Contractor out to the property.

I have him do a look at the entire property.

He will draft me up most of my estimates and stuff.

If there is anything very specific he will tell me and I will get a separate inspector to look at the issue.

After I get all my quotes I get an Environmental Inspection

This is an important step environmental problems are very expensive.

The bank usually requires a report as well.

Once I am comfortable with my CAPEX estimates and my upside is still there I let my lawyer know.

After this, my Lawyer and his paralegals will go pull all my tenant estoppels, titles, surveys etc...

He will make sure I am not getting scammed.

Conclusion:

This thread got a little rambly but this is what I typically do when I go to purchase a building.

The most important thing is getting your estimates down. Don't skimp on this.

Also, create a DD checklist.

If you want to see my checklist comment and like.