When acquiring real estate property, due diligence is something that we know is important, but still we dread doing it, and then regret it later. Very often, once we get excited about getting a deal done, somehow we lose sight of what we’re buying. Adam Hochfelder, director of acquisition and development, has worked closely with clients to allocate risk appropriately, ensure the soundness of each transaction, and close the deal swiftly and successfully.
When it comes to commercial property, there is only one thing we can take for granted, the seller always knows more about the property than you do. As a buyer, our job is to investigate, and find out the information that the seller doesn’t want to share, or maybe he isn’t aware of, but is very important to the buyer in order to make an intelligent decision about the deal.
The first level of due diligence is proper market analysis. This is the process of gathering and analyzing demographic, socio-graphic, and other data to determine if the market fulfills your criteria for investment.
The information for property analysis during the due diligence period falls into three general categories: financial, operations, and legal conditions. With this article, Adam Hochfelder will try to addresses the first category, financial due diligence.
The valuation of an income property is dependent on the amount of income being produced, so in order to determine value we must start with the financial data. The goal of due diligence is to gather the information needed for an accurate depiction and for accurate valuation.
To begin with, we must concept an accurate representation of the operations. Different owners operate properties in different ways, so that means we can only value the property based on how we will operate it.
Next we need to verify every item of income and expense, and then use that information to accurately project the property’s performance.
Adam Hochfelder has an established track record for enhancing asset value and tenant services while reducing operating costs. His presence in real estate brokerage, development, consulting and real estate management provides a tremendous advantage to clients.