Due Diligence Facts Every CRE Investor Should Know

 Posted on December 00, 0000 in Commercial Real Estate

Due diligence is a critical step in the acquisition of a property, especially for those dealing in commercial real estate. Done effectively, the process can protect you from lengthy project delays, zoning issues, and other negative consequences. In contrast, failures in your due diligence process may lead to extreme financial loss and an overall poor return on investment. Learn how to avoid mistakes and oversights in your due diligence with these crucial facts.

You Need to Spend Time at the Property 

Far too often, investors rely on the “experts” to handle the due diligence process. They hire an inspector but do not attend the inspection, contact someone to value the property but are not present during the valuation process, and rely on reports to tell them whether the building is up to code. Sadly, this is a massive mistake.

Spending time at your property not only allows you to learn about it, it ensures you fully understand any potential issues. Rather than simply reading a report, you can talk to the fire martial or inspector to get an in-depth understanding of the issues (and the potential cost to fix). Simply being in the space can help you determine whether your goals and intent for it are realistic. So, if there is even just one thing that you change about how you conduct your due diligence, let it be a massive increase in the amount of time you spend at your properties.

Each Lender Has Its Own Underwriting Criteria and Process

Every lender has their own criteria. Each also has its own host of benefits and disadvantages when it comes to the underwriting process. Some may require more money down. Others may have specific limitations or exclusions on the types of reports they will accept. Environmental issues, current leases in place, and your intended use of the property may also be considered (and potentially problematic), depending on the lender. Save yourself some frustration (and maybe even money); consult with multiple lenders and seek to understand their criteria before you sign.

Our Naperville Commercial Real Estate Lawyers Can Smooth the Process

With so many loopholes and potential issues in the due diligence process, it is advised that commercial real estate investors have an advocate on their side, protecting their interests. Lindell & Tessitore, P.C. provides trusted and thorough services to suit your investment needs. Start by first scheduling a personalized consultation with our Oak Brook commercial real estate attorneys. Call 630-288-2555 today.

Sources:

https://www.foxbusiness.com/features/how-to-carry-out-real-estate-due-diligence

https://www.realwealthnetwork.com/learn/due-diligence-real-estate/