After you have signed the purchase agreement (PA), you need to get busy. Hopefully, you have specified sufficient scope and duration for due diligence with the help of an experienced real estate attorney.
If you have not got all the documents mentioned in the prior article — Real Estate Due Diligence – When you purchase a commercial property (Part 1), you have no excuse now for not getting them. Third party documents are very important to your evaluation of the property. It is always better to study them before you sign the PA.
It is imperative to inspect every unit, suite or apartment. I also advise my clients to conduct tenant interviews. From these interviews, you will learn valuable information related to the building and neighborhood, tenant’s lease and obligations, tenant’s financial fitness, and other information. The property manager should also be interviewed if possible. Sometimes the manager will tell you issues that the tenants cannot.
Building information provided by the Seller must be verified. They include any violation, building measurement, and condition of the mechanical systems. An inspection of physical building and mechanical systems is a must. When you are conducting the physical inspection, you should also pay attention to the issues related to energy efficiency – what is the current energy usage, type of lighting, any conservation methods used. This will help you to identify possible improvement, future savings, and value adding after your purchase.
Attorney Lei Jiang is an experienced real estate attorney licensed in Ohio, New York, Michigan and Illinois. She has helped many clients to achieve success in real estate. For any real estate issues, transactions or disputes, please contact her at (440) 835-2271.
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