Due Diligence Period for Income Producing Property
Eight items to consider during your due diligence when buying income producing commercial property.
Due diligence is a critical stage in the process of buying commercial real estate, as it allows you to thoroughly investigate the property and make an informed decision about whether to proceed with the purchase. Here are some key elements that you should consider including in your due diligence period:
Property inspection: Conduct a thorough inspection of the property to assess its physical condition, including its structure, systems, and equipment.
Environmental review: Evaluate any potential environmental hazards, such as the presence of hazardous materials or contaminated soil, and assess the property's compliance with environmental regulations.
Title and survey review: Review the property's title to ensure there are no liens or encumbrances, and obtain a current survey of the property to confirm its boundaries and identify any easements or rights-of-way.
Zoning and land-use review: Investigate the property's zoning and land-use status to determine if it is suitable for your intended use and if there are any restrictions or limitations on its use.
Financial review: Review the property's financial records, including its operating budget, rent roll, and financial statements, to assess its financial viability and potential for future income.
Market analysis: Analyze the local real estate market to determine the property's market value and rental potential, and assess the overall demand for commercial real estate in the area.
Legal review: Review all relevant legal documents, such as the purchase agreement, lease agreements, and any contracts or agreements related to the property.
Tenant review: Review the tenant mix and lease agreements to assess the property's rental income potential and potential risks associated with current tenants.
Due diligence checklist: Use a due diligence checklist to ensure that you have thoroughly evaluated all relevant factors and have all the information you need to make an informed decision about the property.
When it comes to your due diligence period hiring a trusted Commercial Broker is important in order to help you navigate through all the paperwork and inspections. Contact Joyce Dabbs today for a consultation.
Phase 1 Environmental
Understanding what a Phase 1 Environmental Survey is and why it is important.
A Phase 1 Environmental Survey is a critical tool for property owners, developers, and lenders when buying, selling, or financing commercial property. In this blog, we will explore the reasons why a Phase 1 Environmental Survey is essential, what it entails, and how it helps you make informed decisions about your commercial property.
What is a Phase 1 Environmental Survey? A Phase 1 Environmental Survey is a comprehensive examination of a commercial property’s current and historical use, as well as its potential for environmental contamination. The survey provides an assessment of the site’s environmental risks and identifies any potential liabilities associated with the property.
Why do you need a Phase 1 Environmental Survey?
To Identify Environmental Hazards A Phase 1 Environmental Survey can help you identify any environmental hazards on your commercial property. For example, it can detect the presence of hazardous chemicals, oil or fuel storage tanks, asbestos, or lead-based paint. Knowing about these hazards can help you take necessary precautions and make informed decisions about the property.
To Meet Lender Requirements If you are financing your commercial property, your lender may require a Phase 1 Environmental Survey to assess the potential environmental risks associated with the property. This survey can help the lender determine the level of risk involved in lending money for the property, which can affect the loan’s interest rate and terms.
To Protect Your Investment A Phase 1 Environmental Survey can protect your investment by identifying potential environmental hazards and liabilities. If a hazard is discovered during the survey, you can address it before purchasing the property, which can save you time and money in the long run.
To Ensure Compliance with Environmental Regulations A Phase 1 Environmental Survey can help you ensure compliance with local, state, and federal environmental regulations. This can protect you from penalties and legal action that may result from non-compliance.
What Does a Phase 1 Environmental Survey Entail? A Phase 1 Environmental Survey typically involves a review of historical records, site inspections, and interviews with relevant parties. The survey also includes a review of government databases, such as the Environmental Protection Agency (EPA) and the Department of Environmental Quality (DEQ), to identify any previous environmental incidents or liabilities associated with the property.
Conclusion A Phase 1 Environmental Survey is a critical tool for property owners, developers, and lenders when buying, selling, or financing commercial property. It helps identify environmental hazards, meet lender requirements, protect investments, and ensure compliance with environmental regulations. If you are considering a commercial property, be sure to invest in a Phase 1 Environmental Survey to make informed decisions and protect your investment.