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    The Due Diligence Handbook For Commercial Real Estate
    The Due Diligence Handbook For Commercial Real Estate
    The Due Diligence Handbook For Commercial Real Estate
    Ebook163 pages1 hour

    The Due Diligence Handbook For Commercial Real Estate

    By Brian Hennessey

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    About this ebook

    There’s a huge problem in the CRE business today that nobody is talking about- Due Diligence.

    Investors and brokers barely scratch the surface when purchasing commercial real estate investments, mainly because “they don’t know what they don’t know”. They’re needlessly throwing money away or making bad investments, as well as putting themselves through a tremendous amount of stress, worry and mental anquish by not conducting their due diligence properly.

    The information in this handbook, which is a step-by-step "roadmap", is a proven system that helps you to be able to invest with confidence, while making an informed and intelligent decision to buy or NOT buy. It's applicable to all the different property types, such as: multi-family residential, retail, industrial, office, or any real estate investment.

    Having and adhering to a proven system allows you to do it faster, easier, as well as more efficiently, and you’re less likely to miss something.

    I’ve been in the commercial real estate business for over 30 years as a broker, syndicator and acquisition/disposition executive for an investor and his investors. I’ve bought and sold over 9 million square feet of commercial properties all over the US. After the first couple of transactions I decided to create a reference manual for myself to help remember all of the issues and problems to look for, questions to ask, checklists needed, concerns to be addressed, etc. So every time I came across a new lesson to be learned, which there were plenty, because I "didn't know what I didn't know", I'd include it.

    After showing my reference manual to some friends in the real estate business, they said I should share the information, that others would find it valuable. Since publishing it, thousands of copies have been sold around the world.

    It has dozens of tips and strategies to help you to avoid problems and issues, as well as create value. Most investors leave big money on the table by not knowing how to properly conduct due diligence when buying real estate.

    By not knowing these important principles, you're just "throwing the dice" and hoping it all works out. Not a good plan. The seller will not be handing a list of problems and issues to you when you're looking at buying the property. They'll be hoping you find none.

    Buy it now. It will be one of your best real estate investments.

    LanguageEnglish
    PublisherBrian Hennessey
    Release dateJul 16, 2015
    ISBN9781310459863
    The Due Diligence Handbook For Commercial Real Estate
    Author

    Brian Hennessey

    Brian Hennessey has been in the commercial real estate industry for over 30 years as: a commercial broker; a Senior Vice President of Acquisitions and Dispositions and ran his own real estate syndication/asset management company. He has represented a number of Fortune 500 Tenants including Bank of America, The Walt Disney Company and Baxter Healthcare.With over 12 million square feet of sale and lease transactions; a wealth of experience was accumulated.Having and adhering to a proven system keeps you from missing something and allows you to do it faster, easier and more efficiently."The Due Diligence Handbook for Commercial Real Estate" was written originally as a personal reference tool/checklist because of the many facets and volume of information that is needed to be remembered for each transaction. It is filled with information that is useful in any commercial real estate investment purchase; an apartment building, retail, industrial, office or residential property, from the smallest to the largest. The fundamentals remain the same, no matter what the property type.Much value can be added to an investment by being aware of the potential of each opportunity's strengths and weaknesses and using them to your optimal advantage. This handbook will help you to uncover those so that you may make informed and intelligent decisions while analyzing commercial real estate investments.He is also the author of "The How to Add Value Handbook for Commercial Real Estate", "The Residential Agent's Handbook for Commercial Real Estate" and "Too Old to Hire, Too Young to Retire, A Comprehensive Guide for Body, Mind & Soul".

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    • 5/5
      A must read for new Commercial Brokers, straight to the point.

    Book preview

    The Due Diligence Handbook For Commercial Real Estate - Brian Hennessey

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    Reader Comments

    Must Read if you are buying any commercial property. The author has done a great job identifying the items and issues that must be reviewed and considered before purchasing an investment property. The book takes a step by step approach and is very comprehensive. It provides good check lists and forms, and identifies many due diligence items that most people would not think of. I run a real estate investment company and would recommend this book to anyone who is considering buying an investment property.

    – Mike Adler, President, Adler Realty Investments

    The Due Diligence Plan Handbook for Commercial Real Estate is a welcome and pragmatic addition to the field of commercial real estate. It contains a step-by-step template for the due diligence process that can be utilized by both beginning real estate investors and seasoned professionals. I was especially impressed with chapters 4 through 6, which detail the inspections and reviews that should be undertaken to determine the physical and financial condition of the property. The information you will uncover through these inspections and reviews is critical to determining whether a property will be a good investment and establishing an appropriate purchase price based upon its physical condition and cash flow. Chapters 4 through 6 alone are worth the purchase price of the book. As an attorney I also appreciate the advice in chapter 3 regarding documenting all communications and developing a tracking system so that the buyer can make certain that all issues which have arisen in the course of the due diligence process are addressed. I highly recommend this book, especially to anyone who is new to commercial real estate investing.

    – Charles P. Werner, Real Estate Attorney

    If you’re a broker, lender, buyer or seller in real estate, this is a must read. I’m glad to have come across this book recently and recommend it highly to anyone involved in real estate, commercial or residential. The Author did a fantastic job breaking down all aspects of what to look for when buying commercial real estate which can be also highly useful for sellers as well in preparing their properties for sale. The book gives you a very strong foundation in all areas of how commercial real estate works, leaving the reader with a very good overview of what to focus on prior to making the offer as well as during their ‘free-look’ period. I learned more reading this book than I learned in my college real estate courses. Easy read, well written and an excellent reference manual you’ll want to keep on your desk going forward. Two thumbs up!

    – Tim Hasselbach, Property Condition Assessment Technician

    Investigate Investment Real Estate Like a Seasoned Professional. What a helpful tool for anyone (including old pros) acquiring commercial real estate. Too many investors find trouble only after they have closed escrow. However, many after closing issues can be avoided with a thorough due diligence review prior to owning. Mr. Hennessey has provided a thorough overview of the items an investor should investigate. If the advice offered in this book is followed completely, even the most unsophisticated first-time buyer will appear to be a seasoned commercial acquisition expert.

    – Bruce Blumenthal, V.P. Acquisitions, Blue Ridge Properties

    Incredibly digestible and thorough!!! This book is fantastic. As a real estate attorney, I appreciate the concise pragmatic style in which complicated aspects of diligence are clearly conveyed. Diligence is an often overlooked component of real estate, and this book gives both the sophisticated investor and the first-time investor a playbook to focus on the important issues involved in a deal. I highly recommend this to anyone in the real estate business, as it will help refine your own practices.

    – Brad Keyes, Real Estate Attorney

    This information will give brokers another skill set and add tremendous value for their clients.

    Investors are always looking for better ways and smarter team members to purchase investments with. This due diligence system helps you to become a more valuable team member.

    – Mike Lipsey, President, The Lipsey Co,International leader in training and consulting for the commercial real estate industry

    This book is well put together and easy to read. Plus, it isn’t too big or too small. Plenty of real world suggestions and checklists which are great for everyone in any area of real estate; particularly Commercial, Industrial, and Multi-family. Even the folks in strictly single family residential could use many of the suggestions in the book to really help out their clients move through any given transaction and dispatch their obligation as a fiduciary.

    – Todd Rubinstein, Real Estate Broker

    Contents

    Introduction

    Foreword

    Why You Want to Learn . . . To Conduct Due Diligence When Buying Commercial Real Estate

    Chapter 1 During Negotiations of Purchase & Sale Agreement

    Chapter 2 The Purchase & Sale Agreement is Executed

    Chapter 3 Other Critical Issues That Must Be Explored

    Chapter 4 Energy Savings, Cost Cutting Tips & Other Items

    Chapter 5 Mechanical/Physical Inspections

    Chapter 6 Physical and Mechanical

    Chapter 7 Review of Property’s Books and Records

    Chapter 8 Underwriting and Financial Analysis

    Chapter 9 Additional Items to Explore for Industrial, Retail, and Multi-Family Properties

    Chapter 10 Heading Towards the Finish Line

    In Conclusion

    Exhibit A Sample Lease Abstract Form

    Exhibit B Due Diligence Checklist

    Exhibit C Due Diligence Document Checklist

    Exhibit D Sample Tenant Questionnaire Letter

    Acknowledgments

    Resources

    Consultation Services

    About the Author

    The Video Course and Certification Program

    Introduction

    There’s a huge problem in the commercial real estate business that nobody is talking about—DUE DILIGENCE. The majority of investors, real estate brokers and commercial real estate professionals barely scratch the surface conducting their due diligence when purchasing commercial real estate investments. Investors are taking unnecessary risks and throwing money away or making bad investments, by not properly performing due diligence. Brokers are putting themselves at risk for potential litigation and missing an opportunity to help their clients as a true ally by learning these principles.

    Having and adhering to a proven system while conducting due diligence, allows you to do it faster, easier, more efficiently and you’re less likely to miss something.

    It reduces the stress; makes you feel more confident; makes the sellers and agents of the properties less likely to try to play games while negotiating with you. It ultimately helps to make you a better investor because you are more prepared to make an informed and intelligent decision to buy or NOT to buy.

    Commercial real estate transactions are more complex than buying residential properties and have many more facets to the investment and negotiations. It’s imperative you learn how to deep dive into the investigation of an opportunity so you can uncover those issues that can affect the investment, both positively and negatively. By learning how to do it correctly you will be in a better position to negotiate against any seller. You’ll be armed and ready to strategically address those items and challenges to place yourself in an advantageous position.

    This handbook was created to give an overview of the due diligence process. It is written in a concise pragmatic fashion as a real due diligence tool and is not intended as a voluminous textbook of information on the subject. It is based upon over 30 years of experience in the commercial real estate business and acquiring over 9 million square feet from private and institutional owners.

    The fundamentals remain the same whether you’re acquiring residential rental properties, an industrial building, a skyscraper or a retail shopping center.

    Many of these lessons covered here were learned the hard way. There are two ways to learn; from your own mistakes or from other’s mistakes. It’s always easier and cheaper to learn from other’s mistakes. I am convinced this handbook will be a useful tool from which investors can avoid mistakes in the due diligence process and gain a better understanding of the salient due diligence issues, as well as create value when purchasing investment properties. I say convinced because I wrote this handbook for myself over a six-year period of being an acquisition vice president for an investor and his investors purchasing properties across the U.S.

    I decided after the first couple of transactions I did doing acquisitions, where I was taken to school and taught some expensive and humiliating lessons, that I was going to make sure that they did not have to be learned again. I simply didn’t know what I didn’t know. So, I created a reference manual and system for myself that had all the issues that needed to be reviewed; the questions that had to be asked; the checklists I needed to go over, so that I didn’t have to remember it all or forget anything. After sharing it with some friends, they told me that I should share it with others.

    Eventually

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