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Updated about 16 years ago,
Due Diligence Cost
Hi, i was wondering how do you other investors come up with the funds to pay for your due diligence cost (soft cost), which on commercial real estate deals can be substantial.
the reason why i ask this question is because most banks that will finance your deals will not pay for your due diligence cost or will let you roll it over into your loan (i guess they want you to come out of pocket for these cost).
i know about private funds, but right the money the private lenders lend go straight to the closing table and not in your hand or acct to pay for due diligence cost which are due right away
or is it simply just getting an equity investor to pay for these cost (which the banks won't mine, because its not adding any more debt to the property). or it is getting all due diligence cost rolled into the closing (make them wait for their payment) down payment cost and then using your other funds to pay them off.
i just wanted to know how all this works, because i always hear people saying they bought this and that with no out of pocket money, but i figured if your going through the due diligence process and something doesn't check out correctly and you don't purchase, somebobdy is gonna be outta money, right.