Steps in Purchasing a Commercial Property

STEPS IN PURCHASING NNN PROPERTY IN NASHVILLE, TN(Time is money. Make sure neither is wasted.)

 

IDENTIFY THE RIGHT PROPERTY

a. Review many properties.
b. Analyze the demographics (surrounding retail, traffic counts, ingress / egress).
c. Analyze the tenant (credit worthiness, track-record, franchise vs corporate, store sales).
d. Analyze the lease (landlord obligations, rent increases, option periods, termination provisions).
e. Compare and contrast each property.
f. Narrow down to the one right property.

SECURE THE RIGHT PROPERTY

a. Submit a Letter of Intent to purchase the property.
b. Convince the seller you are the right buyer (having closed properties with the seller makes a tremendous difference).
c. Finalize the letter of intent.
d. Prepare for the purchase contract.

FINALIZE THE PURCHASE CONTRACT

a. Seller’s attorney will prepare a purchase contract shortly after the Letter of Intent is agreed to.
b. Your attorney must be ready to review / negotiate the purchase contract. Your broker must prepare your attorney based on knowledge gained from finalizing the Letter of Intent.
c. Determine what due diligence items the seller has and will provide during due diligence. Line up survey, engineer and environmental providers before the purchase contract is signed (if sufficient reports are not provided by seller).
d. Sign the purchase contract.

DUE DILIGENCE

a. Your due diligence period begins the day your purchase contract is signed. Make sure that you, your broker and your attorney are 100% engaged and ready to confirm you are purchasing the right property. Careful analysis in the prior steps will make this step much easier.
b. Tenant financials, title, survey, engineer report, environmental report, certificate of occupancy, tax certificate, property insurance, estoppel certificate, construction warranties, warranty deed and loan documents (if applicable) must be reviewed and approved before your due diligence period concludes.

CLOSING

a. Closing is the culmination of proper planning and thorough analysis. You have reviewed many properties and identified the one right property. Now comes the fun part.
b. Now that your due diligence is complete, you want to close the property as quickly as possible.
c. Your attorney will prepare and review the closing documents.
d. You make money (rent) the day you close!