currie french property

If you have a property under contract, you know very little about their characteristics. You can create a balance and a rent roll in your hands ... and maybe you have a drive by inspection. But that is just enough information, a minimally intelligent offer. You have to understand a lot more about the property to know the true value.

That is what is responsible for due diligence.

A comprehensive due diligence process of removal of risk materials from your investment. You get thirty days to learn enough to understand exactly what you are in, and exactly what it is - as part of your management - to make a profit.

We advise our clients mentor for the use of a specific sub-four-due-diligence process, because we have found there are four possibilities may risk your return.

- Market Risk
- Financial Risk
- Tenants Risk
- Physical Risk

These four risk threats together like pieces in a puzzle. Our four part-due-diligence process ensures that you deal with any property puzzle from four different angles.

And the order is very important. As you each step of our do-diligence process of the current real estate must step into the next.

Example: If you discover the market risks are too high, it does not matter what the financial proforma says what the ownership or physical control displays. The market will fall, that the investments so that the process is right and stop, please go for your serious money back.

Here are the four parts in detail:

Step 1:

Market Due Diligence:

Check your assumptions about the market, in which the property is located.

- What are the population and employment growth projections?
- What are the occupancies and rents for similar properties?
- What are rent growth projections?
- Which phase of the cycle, the market in this market?
- What level of new development in the asset type is in the pipeline?

Question: Do you want to own property in this market? If yes, go to:

Step 2:

Financial due diligence:

- Request at least three years worth of monthly profit and loss accounts and as many as Rolls Rent your hands on.
- Contact the Property Manager and a detailed cost projection based on their experience in this market.
- Connect your income / vacancy / rent estimates of expected market your due diligence step.
- Get estimates of the loan and the projected payments from the mortgage broker.
- Create your investor's pro for 3-5 years.

Question: What will it take for you to hit your ROI numbers at this price? Is that even possible? If yes, go to:

Step 3:

Tenants Due Diligence:

(This is especially important in industrial, office and retail real estate).

- What is the strength of the current tenants and their existing?
- You will need to do a thorough analysis of the principle of the underlying business strength.
- This gives you an estimate of their ability to continue to pay rent.
- Perform a complete analysis of the existing leases with estoppel letters to the contents of the lease.

Question: Are the rents - and the companies behind them - good enough and safe enough to continue?

If this is the case, go to:

Step 4:

Physical Due Diligence:

- Perform a walk-through entity for each and every square meter of building (s).
- Create an estimate of all repairs and costs associated with repairs.
- How much money, time and effort will it take for the property in the state that will allow you to take your rent and occupancy figures?

Question: Will you be able to meet with these ROI numbers in your proforma repairs?.

Note: Physical Due Diligence is always saved until last for a simple reason.

It does not matter what the building looks as if they are not on the first three steps of due diligence. A great looking building in a bad market, or one that is not to your ROI hurdles, or one that is not short-term leases is still a bad investment ... no matter how beautiful it is when you drive through.

When you enter your due diligence process with these four steps - in that order - you have a clear understanding of the property and the current state exactly what you need to make a profitable investment.

Due diligence of the pieces of the deal. And since you are still in the due diligence period to determine if the risk is too high, you can be reached on foot.

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