All Forum Posts by: Account Closed

I am a fiancial investigator and run across all sorts of fiscal mischief.   Two red flags in M&A due diligence are being rushed to close and feigned disorganization of reocrds and information by the target.

What are the signes in RE, residential and commercial, that are red flags that there is a problem with a property?  Those transacation "tells" to mischief. All replies - no matter how small, are deeply appreciated.

First - congradulations on the growing pains.  These are good problems to have.  While I agree with most everything posted - hire a tax accountant or even better a tax attorney to advise you. Its not just federal taxes, but there are impacts from state, county and even some cities.  It is best to have a local person familar with all of those bodies of law to advise you.  Not that I might be paranoid - I am paranoid and errors in this transition almost always have a long legacy of corrections and costs if errors have been made at this stage.

It is not your choice - you have to comply with the laws, including the tax laws.  Have him be mad at himslef for trying to be too cleaver by half to skip on taxes.

All good answers – but let's drill down a bit deeper. The data on credit reports is not primary or even secondary – it is tertiary. It is at a minimum 3 steps removed from an obligation. In a recent study it was found that 1 in 4 had significant errors in their credit reports. The US Congress mandated research to be performed and they found 1 in 5 had significant errors in the credit reports.

How does this happen, it is very simple. The data is dumped into massive databases and the databases then use logic algorithms to sift and sort and attribute the data. If the data is dodgy, or the sift and sort is not up to snuff, you get very bad results very quickly.

Data for ongoing obligations is reported reasonably well as it is all programmed into the monitoring software. However, most organizations are very bad on reporting a closed or satisfied account especially when it come to car liens and property liens.

So do not look at credit reports as a gospel – look at them as more of a hint.

For me, I had a 40K paid sat loan from a Florida lender. I have never lived or worked or borrowed in Florida. I tried to have the good news removed from my credit report but “We have no mechanism in place for removing erroneous good credit” was the answer I got. I am not surprise – credit reports have more in common with sausage making then fine timed prime cuts.

Very good advice. I might add check the city for any development scheduled either in the area or in front of your property – water, sewer, electricity, etc.. that might cause distress to tenant Also check calls for service with police and give to see if anything really bad has happened – such as a past fire or flood that has not been disclosed. Last have a building inspector look very coldly (not closely but coldly) at the building – and look for legacy issues such as banned materials, dodgy plumbing or electricity, deferred maintenance etc.. Last – what upgrade would you be required to make if you did any remodeling? That is a city code issue. All bit of information add to the weight in negotiation.

For transportation studies look to the Urban Land Institute. Tons of information.  As for how far will someone walks, well it depends...   It depends on the city and the weather.   Folks out east will walk further than folks out west - everyone walks less in inclement weather, hot, cold, rainy, etc...   Also mass transit has to be with 20% of the travel time for commuters to shift from cars to mass transit.   But this is a vast generalization.   Contact the local cities planning and zoning or transportation department and they can give the figures relative the to area you are looking at.

I am a financial investigator and a due diligence professional. I have joined this community to both share what I have learned in real-estate due diligence and learn from the other members yet even more. Nearly al my work has been as part of a Mergers and & Question Team looking at companies with many different assets including real-estate in many countries.

If you like the home in foreclosure – you can also contact the lender to see if they will entertain an offer from you for you to buy the note – and you continue with the foreclosure. I have seen this work effectively on many properties – as long as the lender was not a huge monster lender. With the monster lendrrs you just cannot penetrate the grist mills of procedures to find anyone who can make a decision.

The due diligence on a single-family residence is pretty routine anymore. Full title report, a home inspection by a “certified” home inspector and then you make your choices based upon those. But, I might add a few additional tips – check for any permits pulled in the last – say 10 years. If additions have been made or substantial remodeling made without a permit – there may be an issue. The other is call both Police and Fire for “calls for service”. See if there has been any fires, or events that might color you purchase choice.

My favorite story is a 7,200 sq. foot home appraised at 2.2 million that was listed in the country assessor’s office as 1,800 sq. feet. ALL of the additions and upgrades were done without any permits. It passed the home inspector, and the appraiser, and the lender, and the title company. No one caught the issue. It was an expensive lessor for all.

Thank You - lets see if I can stumble forward and help with due dil