Progress with the portfolio! Due diligence is officially past us. We have come to a final price agreement with the seller and are confident this is a win-win scenario for both the seller and our investors.
Typically, smaller projects enjoy a straight forward due diligence process:understand the seller disclosure, study the leases, inspect the building, etc. This project has proved more complex at every turn. We have needed to inspect a variety of both residential and commercial buildings, engage with the city to ensure the correct zoning, reach out to nearly a dozen companies for repair estimates, and spend countless hours with our GC (General Contractor)to formulate an adequate game plan to maximize value for the renovation.
Fortunately, the seller has been quite accommodating during our due diligence process, allowing us to inspect the property multiple times. There is no substitute to walking through a property with your GC to tackle a ‘bar-napkin’ cost-benefit analysis together. I would argue this is a must-do prior to any larger acquisition, as you must know your renovation estimate prior to moving forward with the deal. Once due diligence passes, your get out for jail free card is gone!
Although you ‘make your money on the purchase’ of a property, you can alway skill a deal with poor planning during the renovation! Unforeseen circumstances are guaranteed; so always add in a contingency to your bottom line.
