Real Estate 100 LTV

Due diligence is a comprehensive, complex, and critical stage in any commercial real estate acquisition. You don’t want to leave any stone uncovered, and you want the most time available to review all documents and look for any and all possible red flags with the property, title, tenant relationships, and numerous other considerations.  That’s why we’ve created the checklist below, which outlines many of the key documents, records, and financial information needed for a full and complete due diligence on a prospective property acquisition.  In many transactions, we typically urge clients to incorporate this checklist into the sale contract and require that the specified due diligence period will not commence until the date that the seller produces the last of each of these deliverables.  Simply put, when you’re the potential buyer of a property, you deserve to have all the necessary documentation in your hands before you start the intensive due diligence process. W

All formulations are annualized based off of ANNUAL AMOUNTS. Basic Formula's 1. Gross Scheduled Income (GSI) GSI is the annual rental income a property would generate if 100% of all space were rented and all rents collected. If vacant units do exist at the time of your real estate analysis then include them at their reasonable market rent. Rental Income (actual) plus Vacant Units (at market rent) = Gross Scheduled Income 2. Gross Operating Income (GOI) GOI is gross scheduled income less vacancy and credit loss plus income derived from other sources such as coin-operated laundry facilities. Consider GOI as the amount of rental income the real estate investor actually collects to service the rental property. Gross Scheduled Income less Vacancy and Credit Loss plus Other Income = Gross Operating Income 3. Operating Expenses Operating expenses include those costs associated with keeping a property operational and in service. These include property tax