My First Offer

[Brett Thomas]

Hey yall,

Need some guidance on my first offer. It's on a 20 unit apartment complex.  I'm going to request seller financing offering 15% down. The seller is asking a lot for it, and frankly I'm pessimistic about my chances, so I view this as practice more so and if by some stretch of luck I can get a deal, I'd be more than tickled.

1. When someone asks you to make them an offer, it isn't binding unless it's on an official LOI, correct?

2. I plan on creating an entity soon. Does the entity buy this property or do I buy it in my name?

3. How specific should I be in my first offer? Do I outline things like preferred length of due diligence, certain contingencies, etc?

4. I saw a checklist on due diligence periods when purchasing these types of properties, can someone direct me to that link?

5. Any info on the financial analytics of purchasing these types of properties would be helpful too.

Thanks guys. Any advice or help will be greatly valued.

[Chris Erwin]

Hey @Brett Thomas it is great you are looking to invest in an apartment building. Have you invested in real estate before? Here are my thoughts on the questions you posed:

1. When someone asks you to make them an offer, it isn't binding unless it's on an official LOI, correct? Correct, it is not binding just making an offer. It is binding once you have signed a purchase agreement and paid earnest money,

2. I plan on creating an entity soon. Does the entity buy this property or do I buy it in my name? I always recommend putting investments into an entity to protect your personal assets. 

3. How specific should I be in my first offer? Do I outline things like preferred length of due diligence, certain contingencies, etc? I would be very specific. Outline what you want out of the deal.

4. I saw a checklist on due diligence periods when purchasing these types of properties, can someone direct me to that link? Not sure on any checklist.

5. Any info on the financial analytics of purchasing these types of properties would be helpful too. You can try and find sold comps, but with an apartment building, it's not as easy as finding comps for single family homes. I would enlist the assistance of a broker to conduct a BPO for you, or even go a step further and order a full appraisal. You don't want to overpay for this investment.