A letter of intent (LOI) is the initial offer to the seller of a commercial property that you want to buy. The commercial real estate letter of intent should tell the broker and/or seller that you’re a serious buyer who is ready to close at the price and the terms you have spelled out, provided
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What is an IRC 1031 Tax Deferred Exchange? Simply put, an IRC 1031 tax deferred exchange allows owners of real or personal property to defer the recognition of a capital gains tax when they have sold their property. They have been around in one form or another since 1921 and in its current form since
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MAKING OFFERS Most successful investors only work on deals that they feel they can close. This means that you need to have a plan in place that eliminates the deals that won’t work for you. Here’s how to develop that plan: • Develop a qualifying system of identifying the types of properties that you want
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AS A BUYER SHOULD I PARTICIPATE IN THEM? As a buyer, the reason you participate in an online auction is because you anticipate getting a good deal. If you are an experienced buyer of commercial real estate you should participate in auctions if you see a property that meets your criteria. As a first time
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One of the most important aspects of commercial real estate investing is finding the right property. And location is a major factor in identifying that property. Location includes many factors as you will see below. For a retail property especially, it is a big key to its success. A good location attracts tenants – and
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To do a proper commercial real estate analysis, you must understand its market value. Long term successful investors make money when they buy, not just when they sell. You reduce risk and increase your chance for great returns when you buy properties at or (preferably) below their market values. 3 Techniques to Value Properties Investors,
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In order to understand the closing of a deal when buying commercial property, let’s review the steps of the sales transaction: 1. Buyer submits an offer to buy the property either through a Letter of Intent or a formal Purchase Agreement, any necessary negotiations are completed, and the Seller accepts the offer and executes the
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The commercial real estate appraisal can be a very interesting process. You often feel that you already know what the value of the property is, but now you’re waiting for someone else to see if they validate your opinion. At the same time, you’re relying on an appraiser who may not be an expert at
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If you want to invest in commercial real estate and build significant wealth, it’s going to require that you take the time to think things through. It requires planning, patience and persistence – or, in other words, it requires you to develop a strategy or business plan. Think of this as your road map. Mission
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In the current market, all commercial properties are on sale, because either cap rates have increased and/or vacancies have increased. Increasing cap rates example: Assume Net Operating Income is $120,000 per year and cap rates have increased from 6% to 8% At 6% your purchase price would have been $2,000,000. At 8% your purchase price
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