Commercial Real Estate Investing From A-Z Things to Do When You’re in Contract to Purchase a Commercial Property
What happens as soon as you get in contract to purchase a property? What are some of the things that you need to keep in mind? What do you need to do and how do you need to organize yourself?
You can read this entire episode here: https://montecarlorei.com/things-to-do-when-youre-in-contract-to-purchase-a-commercial-property/
The first step is to have something really simple, like a word document where you will have all of the information on the property in this document. My document has:
- The contact info for the real estate agents.
- The timeline for the deal.
- The link to the property listing.
- How many days I have until closing.
- A link to all of the documents for the due diligence.
- All of the information from the lenders that I have so far and that I have contacted.
- A list of potential property managers for this property.
- My to do list for the next week.
- Things that the real estate agent owes me in terms of documents.
- A list of things that are outstanding that I need to take care of in terms of hiring people, or asking for recommendations for lawyers.
- A list of "surprises" that you find out during the due diligence process.
Week 1
- Reach out to a couple of lenders and finalize a loan application.
- Look for a few more lenders that are local to the area, as well as about three national banks.
- Break down the finances for the lender, and this is going to be breaking down what you're going to do to the property to increase value. For example, we can increase rents on the property by about five to 10 percent (this is self-storage). We can also decrease vacancy. This is going to have to be completely broken down into an excel sheet, by unit.
- Pick a shortlist of inspectors for this property that are local and that can deliver the inspection within a few days of having it done.
- Review a copy of the existing management contract.
- Find a lawyer that is local and familiar with that states laws.
- Find a copy of the state's lease which is a standard lease for that state.
- Get all the documentation for that income and expenses for the last two years for this property. And this will also be for the lender.
- Look for potential new property managers, if that is our plan.
Week 2
- Have the lawyer review the management contract and make any adjustments for the actual lease contract for the units.
- Finalize the profit and loss statement and our projected vacancy for that first year.
- Finalize how we're going to structure the payment for a potential contractor that will work on renting the vacant units.
- Finalize the loan packages for the banks.
- Call the remainder lenders that are on our list that we found on the first week.
- Look for an insurance company, and we might just continue using the same insurance company that is insuring the property to make things easier. So we need to get their contact information.
Week 3
- Make sure that we get the final inspection reports from the inspectors.
- Start narrowing down the list of lenders that will move forward with this property.
Week 4
This week is currently open for the items that will come up during weeks 1, 2 and 3. We're going to be dealing with whatever we uncover, or still need at that time.
Week 5
- Finalize things with the lender and we will be looking at the miscellaneous things that we need to get done after we close on the property.
- Find phone centers that are familiar with taking calls for self-storage properties.
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