Commercial Real Estate Due Diligence...
Perhaps Your Most Important Task As A Real Estate Investor
A properly executed commercial real estate due diligence process can be an onerous task, but an extremely important one nonetheless. From the moment that you begin considering the purchase of a commercial property, the due diligence time clock begins to tick. It is crucial that you know what you are doing, know what to look for and know what professionals you need to hire to complete the process effectively. Ignorance may be bliss as they say, but it could also cost you dearly.
So how does someone starting out in commercial real estate investing learn what they need to know about proper due diligence? Unfortunately, much of the real estate educational material you find in the book stores does not do the due diligence process justice. The authors typically mention how import it is, give you a "to do" list and send you on your way. But let's face it, talking about commercial real estate due diligence is not the sexiest of topics. Investors like yourself want to hear about cash flow, appreciation, making money and of course "getting rich". Right? Well, I can tell you from my own experience that,
the better that you understand the commercial real estate due diligence process, the more money you will make, and perhaps more importantly, the less money you will lose. Period.
My advice to you? Give commercial real estate due diligence its "due".
When I started out in commercial real estate 16 years ago, I didn't have a handbook on due diligence. I learned as I went along, gathered as much information as possible, and tried to hire the right professionals to complete the portions of the process that I was not qualified to undertake.
If there is one thing I have learned about commercial real estate investing along the way, it's that there is no substitute for actual real life, hands on experience. And this is especially true of due diligence. There is just no way to get good at this without doing it. Every deal that you look at will have a new twist to it that you haven't seen before. Having said that, the next best thing is to learn from someone else's experiences.
On that note, I recently came across a very good commercial real estate investing resource. Written by a 31 year veteran of the industry it is an easy (and relatively inexpensive) way to get invaluable insight and knowledge from someone who has "been there, done that". The e-course is called "Commercial Real Estate Cash Flow Funding System" and you can learn more about it here.
By combining that course with the information I am offering on this website, you will be well on your way to cementing a strong foundation for your future investing endeavors.
Now, getting back to the subject of commercial real estate due diligence... instead of providing you with the same old "list" to check off, and a stern warning, I have tried to compile a series of articles that address not only the areas you should focus on, but things to watch out for within those areas. And, as usual, I try to bring some of my real life experiences to the table as well to try and further your learning of commercial real estate due diligence.
|Sidebar: As with all the areas of this website, I am constantly adding new and updated information to the "Commercial Real Estate Due Diligence" section. To make sure that you stay informed and in touch, I encourage you to sign up for my newsletter.
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Of course, the due diligence process is just one of the many areas that you will need to educate yourself on if you wish to be successful in this business. The best thing I can recommend is to come back and read this site often, and, pick yourself up some goods books and/or courses on apartment investing and commercial real estate. Here is a course that I recommend if you are looking to
purchase your first apartment building
More articles on the due diligence process...
Seller's Pro Formas: There's A Good Reason Why They're Called Liar's Statements
An Introduction To Phase 1 Environmental Site Assessments
Relying On A Phase One Environmental Almost Cost Me Millions
Make Sure You Study The Rent Rolls Properly Before You Purchase An Apartment Building
Finding The Real Insurance Costs For A Rental Property
Return from Commercial Real Estate Due Diligence to Apartment Building Real Estate Investment For The Rest Of Us home page