Time for serious due diligence
This week I negotiated a purchase sale agreement (PSA). There was some back and forth because the numbers were not adding up. The seller had higher expectations for what they might get for the apartment. Also it became clear that the NOI didn't make sense.
Now that I have a signed PSA, I have 60 days to insure that this property is what I think it is. The agreement does allow for a time extension if something major comes up that requires additional investigation time.
What are my expectations?
- Have a good understanding of the rental market, vacancies now and into the future.
- Have a good idea of where my tenants are likely to come from. Nearby employers, schools, tourism
- Be sure that the financial information accurately reflects what the seller has given me.
- Review what I can do with the property, but don't let that effect what the purchase price should be.
- Insure that the building is in sound condition and if not determine what repair allowances should be requested.
- Interview tenants, talk to neighboring apartments, contact the police department, check for wany violations.