Give Due Diligence Its Due

Are you planning to invest in development or income producing real estate?

You've found an appealing property to acquire. Perhaps you've made an offer and are starting to work with a real estate attorney to negotiate the contract. Before a contract is signed or during a contractual due diligence period, a savvy buyer will conduct thorough due diligence to verify the facts presented about the opportunity, calculate the value and identify the risks of the opportunity.

Some typical areas of focus during due diligence...

Do The Numbers Make Sense (Part 2)

Are you thinking about purchasing the condo or cooperative unit in which your business operates? Do you believe it would be a sound investment?

Then treat the purchase like an investor by calculate CAP for the property and comparing to similar opportunities.  The CAP rate typical for the market will fluctuate over time, with interest rates, and differ by property class.

Do the Numbers Make Sense?

 Most investors want to know that 'the numbers make sense' for a purchase opportunity.  Ratios like GRM, NOI, or CAP can rapidly identify properties that warrant deeper consideration or investigation.   They describe the potential to earn money now and later from investment made today to acquire a given property.  So what are these indicators?  Let's look at the ratios in more detail...