Flipper/Rehabber · South Royalton, VT · Member since 2017 · 80 posts · 36 votes
I have an opportunity to purchase a warehouse that looks pretty strong based on the numbers and rent roll I've been given by the current owner. I have a list of the improvements and conditions of the property as well. I also have a list of questions I've generated which include:
1.Why are you selling?
2.Do you have a pro forma available?
3.Schedule E Income and expenses for the last 3 years?
4.What is the zoning?
5.Any major issues with the building?
6.What can you tell me about the mechanicals?
7.Do you have lease info?
8.Who are the tenants and how long are the leases? Rent roll available?
9.What do the leases include?
10.Does it have a clear title?
11.Are there any environmental concerns? Phase II environmental assessment available?
12.Are there any liens, expired permits, back taxes, etc?
I am going for a site visit this week and am wondering what other questions or info would be important to have or find out. Any help would be great. Thanks!
Investor · Coppell, TX · Member since 2008 · 2k+ posts · 646 votes
8y
Hello and welcome to this site for your questions Jill! Right off the bat I would say to never ask for a Pro Forma. It's nothing but a dream and nothing actual. You should only ask for the last 12 months that contains all of the income and expenses by the month in detail, not a summary with nothing but totals. Ideally, you only need the last 12 months unless you are not planning on not make any changes. Any portion of a tax return may not be the actual numbers you want to see. Many of them are not the actual numbers and are prepared to help the owner.
I would take a look at what that subject town shows about the zoning and not just depend on what the owner says. I agree with your question about any building repairs, especially any major ones. The same goes for the mechanicals question. I would ask to see any of the lease materials so you know all of your obligations and the rent you should be collecting and for how long.
Before I bought, I would have that clear title as a contingency clause in the purchase contract that has no penalization statement in it that allows you to say "no" when it is checked by the Title Company or an Attorney's office. Even if you have to pay for it, it should be looked at by an official, maybe with the subject city inspector or a referral from someone you trust about the environmental question.
This may not be necessary depending on the age and location. If you do this, use someone that is a local and is aware of that subject city's laws or requirements. That last question is good too but I would not totally rely on the current owner and check with a local professional service or verify it myself.
Who the hell is this guy anyway and why should I rely on his answer? I am currently 61 years old and have about 30 years of construction management experience and about 30 years of having a real estate broker license in state of Texas. I'm a college graduate with honors in business that emphasized real estate. I was born and raised in Dallas. I hope that this fulfills my words and I hope this helped you in some way.