Jan 9, 2019
What happens when you sign the dotted line and officially go under contract? That doesn’t mean it’s a done deal. You’re not out of the woods yet because there’s still a lot of moving parts to manage.
Here’s part 2 of 3 regarding my University Crossings deal. I share what went wrong, what went right, and how I overcame obstacles that are often part of multifamily transactions.
Topics on Today’s Episode:
- Receive required items/documents identified on Purchase and Sell Agreement (PSA)/Letter of Intent (LOI) from seller
- Seller’s Coma: Seller is unmotivated to give you details due to poor record keeping or they’re trying to hide something
- Establish site visit and physical inspection to rate/asses property’s major systems
- Give all vendors the same instructions; ask them for a fair and do-not-exceed bid
- 45 calendar days for due diligence and another 45 calendar days to close
- Perform financial audit of property’s current leases on file
- Engage a lender to get a loan for the property based on occupancy percentage; loan is in jeopardy and extension may be needed if percentage isn’t maintained
- Owner should never try to negotiate with a broker or seller; let others talk for you
- Lack of communication between all parties involved causes problems and delays; request phone conversation with seller to offer clarification
- Concessions may be necessary, even if something is not your fault; you’ll end up making that money and more back
- Lender isn’t ready because they did not process the loan to close on the property, which put me at risk of losing money
Links and Resources Mentioned:
Quotes:
“Our due diligence does not start until they have delivered it...we have to sign off and say that they have delivered all items.” Corey Peterson
“Do not think we’re stupid. We want you to be fair. We want you to be upfront, and we don’t want you to think that you’re just going to get rich off of us.” Corey Peterson
“Negotiation - everybody goes in with a gun, but no one has any ammo.” Corey Peterson
“We had leverage at this point, and leverage, my friend, is very, very vital to being a good operator.” Corey Peterson
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