What are the stages of buying a commercial property?

[Freeman Schultz]

I am familiar with the stages of buying a single family home. However, I realize the process for buying a mixed use building or multifamily is different.

I have done some online research to answer my question, however, I have noticed that all of the sources use the same terminology for buying a single family home.

Can someone describe the process or at least point me in the right direction for information?

Thank you.

[Charles Carillo]

@Freeman Schultz

• Process of purchasing a property
• Preliminarily review a deal
• Submit an LOI (letter of intent)
• Negotiate the price and terms with the seller
• Start reaching out to lenders
• (If you are raising money and this is the first time doing so – start putting the bug in your potential investor’s ear now)
• Finalize the LOI with the seller and have it signed
• Send executed LOI to your attorney to start drafting the PSA (purchase and sale agreement)
• If you are doing a syndication; prepare the offering memorandum and send it to potential investors
• Reach out to your property manager and inform them of the acquisition
• Start preparing for inspections and due diligence – reach out to inspectors
• If you are doing a syndication; reach out to your SEC attorney
• Start your due diligence over the next 2-4 weeks
• Reviewing; leases, utility bills, bank statements, financials, etc. – review everything
• Perform on-site inspections – walk every unit – w/ inspectors and property manager
• Prepare the loan package for your lender
• If you are doing a syndication; reach out to investors to start confirming equity commitments
• Finalize the loan documentation for your lender
• If you are doing a syndication; start taking backup commitments in case investors pull out
• Setup your property-specific LLC
• Setup property specific bank account
• If you are doing a syndication; send the final PPM to your investors – have them execute and wire funds to escrow – preferably 1-2 weeks before closing
• Close