The Due Diligence Process Plan Handbook for Commercial Real Estate Investments

By Brian Hennessey

This handbook was created to save investors time and money, create additional value and to avoid the potential pitfalls in purchasing commercial real estate, as well as give an overview of the due diligence process. If you're an investor looking to buy a triplex, an industrial building or a shopping center; a property/asset manager helping a client to purchase properties or a real estate broker looking to add to your knowledge base to help clients to invest, this information will be invaluable. It is written in a concise pragmatic fashion as a real due diligence tool and is not intended as a voluminous textbook of information on the subject. It is based upon over 28 years of experience in the commercial real estate business and acquiring over 9 million square feet of office properties, from private and institutional owners. The information it contains is applicable to all commercial real estate investments. The fundamentals remain the same whether you're buying apartment rental units, shopping centers or skyscrapers. We need reminding as much as we need learning. There are many different aspects of an investment that require investigation. You need a reference tool to help you to remember the questions to ask, the places and problems to look for, and where to uncover the various potential trip wires and booby traps that can possibly cause you issues, as well as money, after you purchase the property. That's why I originally wrote this reference book for my own benefit. There are just too many things to remember off the top of your head. I still refer to it regularly.

• Language: English
• Publisher: eBookIt.com
• Release date: Apr 26, 2016
• ISBN: 9780615719634

Book preview

Due Diligence

by Brian Hennessey

EPUB Version

Copyright 2013 by Brian Hennessey. All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission. For information, address Colliers, 601 Union Street, Suite 4800, Seattle, WA 98101

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Table of Contents

Chapter 1 During Negotiations of Purchase & Sale Agreement

Chapter 2 The Purchase & Sale Agreement Is Executed

Chapter 3 Other Critical Issues That Must Be Explored

Chapter 4 Energy Savings, Cost Cutting Tips and Other Items

Chapter 5 Mechanical and Physical Inspections

Chapter 6 Review of Property's Books and Records

Chapter 7 Underwriting and Financial Analysis

Chapter 8 Heading Towards the Finish Line

In Conclusion

Exhibit A: Sample Lease Abstract Form

Exhibit B: Due Diligence Checklist

Exhibit C: Due Diligence Document Checklist

Exhibit D: Sample Tenant Questionnaire Letter

Introduction

This handbook was created to save investors time and money and to avoid the potential pitfalls in purchasing commercial real estate, as well as give an overview of the due diligence process. It is written in a concise pragmatic fashion as a real due diligence tool and is not intended as a voluminous textbook of information on the subject. It is based upon over 27 years of experience in the commercial real estate business and acquiring over 9 million square feet of office properties, from private and institutional owners. The fundamentals remain the same whether you're acquiring residential rental properties, an industrial building, a skyscraper or a shopping center. Many of these lessons covered here were learned the hard way.

There are two ways to learn; from your own mistakes or from others mistakes. It's always easier and cheaper to learn from others mistakes. I am hoping this handbook will be a useful tool from which investors can avoid mistakes in the due diligence process and gain a better understanding of the salient due diligence issues. Some of the ideas and proven tips could easily save an investor tens of thousands of dollars. Each and every time you purchase a property, a unique set of circumstances presents itself - the owner, tenants, building construction, etc - as a learning experience that you can add to your own knowledge base. I only wish I could have had this information available when I first started out purchasing properties. Just the cost cutting tips alone are worth thousands of dollars.

The whole purpose of the due diligence process is to discover the potential problems with a property, reveal any hidden profit potential, and to verify all information that you have obtained. All this intelligence will enable a buyer to make an informed decision on whether to move forward, or not, with an acquisition. In short, a thoughtful due diligence process will afford the buyer confidence that once the acquisition is complete, there will be no material surprises. It is vitally important that everyone on your due diligence team is on top of their particular assignment in the process and that communication lines are open to everyone on the team.

The due diligence process is only one aspect of the commercial real estate purchase transaction, but it is of fundamental importance. For beginning investors, this handbook will provide a useful and efficient resource to cutting through the minutia and focusing on the important issues as well as providing a number of cost savings and