Our Group specializes in the analysis of all types of commercial properties as well as seeking out investment properties that have redevelopment or value added opportunities
Every investor has criteria that needs to be addressed to better suit their needs
Step 1) Determine your investment criteria. Email, or fax your investment criteria to us. Please make sure you include your geographic, risk vs. return, and management desires. We will send you a list of available properties, and will contact Developers or Sellers on your behalf to find properties which may meet your requirements.
Step 2) Review opportunities that meet your criteria. We can help you analyze the investment opportunities and provide you with the significant information to assist you in your evaluation.
Step 3) Submit a Letter of Intent. Once you have determined that a property (or properties) might fit your criteria, we will assist you in drafting a non-binding Letter of Intent. This document helps you and the Developer or Seller "get on the same page" economically, and assists the attorneys in drafting a Purchase and Sale Agreement under terms and conditions agreed to by the Buyer and Seller. Often it is advised to write Letter(s) of Intent on more than one property (especially if the Buyer is involved in a 1031 Tax Deferred Exchange).
Step 4) Negotiate a Purchase & Sales Agreement. Once you have a fully executed Letter of Intent, a Purchase and Sale Agreement is then negotiated by the parties. After all terms and conditions are agreed to between the Developer or Seller and the Buyer, the Earnest Money is deposited with a reputable title company and the Developer or Seller delivers the Due Diligence materials to you.
Step 5) In Escrow – Due Diligence You then have a specified period (usually between 20-45 days) to review the due diligence materials and physically inspect the property or properties. Negotiations, questions and concerns are raised and discussed by legal counsel and both parties during this period. Once all questions and concerns are taken care of, the Buyer and Seller can proceed toward a Closing
What factors impact the value and return of each investment?
1) LEASE QUALITY The Lease document, is very important since it contains the clauses which define how "net" the lease is. The lease determines the landlord or owners' involvement in management, and the expenses associated with the operations of the property. The lease also defines the rental stream and its increases (if any), provides the basis for Lease Renewal Option Periods (if any) and sets out the conditions by which a tenant may terminate the lease or reduce its' rent. The lease document is the "blue-print" of the investment and all potential investors are advised to carefully review, with their legal counsel, the lease document very carefully.
2) TENANT QUALITY The Quality of the Tenant is also very instrumental in determining the value of the investment. Generally speaking, the better or higher the credit or net worth of the tenant, the lower the perceived risk of the investment. Investor's usually are willing to trade return for risk, and accept smaller overall returns in exchange for high-quality virtually risk-free Tenants on the lease. Lesser credit or lower quality Tenants are often very good investments however, because although not considered Investment Grade they are sometimes very good companies that do not have a corporate bond rating because of lack of corporate debt, and or, have a very good story and history and in today's world are often targets of mergers and acquisitions which can lead to credit enhancement. Should this occur, the Investor can realize a better than normal return while receiving the security of a "high credit" Tenant.
3) REAL ESTATE QUALITY The Location of the property is often considered the most important element in real estate. The old adage; location, location, location was coined because many investors, developers, tenants, lenders and landlords put significant stock in the properties' current and long-term residual value. A property that is leased to an "investment grade" Tenant, under a bond-type lease can still be considered less than desirable if it is in a poor quality or inferior location. Investors' should physically visit any potential acquisition, and review the demographics and other statistical data available prior to rendering a decision.
All three of these factors (individually and collectively) have significant influence on the perceived value of a property. A property can be very well-located, have an excellent lease with substantial increases in the rent, yet be leased to a tenant that one may consider speculative at best and potentially headed toward bankruptcy, which will usually lower the value placed on the investment.
No single value component carries more weight than the others. Investors in investment properties should carefully consider each of these factors individually, as well as in combination as they assign their perception of value to the investment property.
