Follow us on our five part series behind the scenes of our private equity real estate acquisition process.
In Part 1 we found the best cities, neighbourhoods and properties to invest in. In Part 2 we analyzed the properties and decided if we wanted to place offers.
Prepare the Offer
To determine the offer price, we use our pro-forma financial model from Part 2 and combine it with market research about cap rates and recent sale transactions.
Submit offer and wait for a response. If the offer is accepted, further due diligence begin.
At this stage, we start looking for a mortgage and conduct extensive physical due diligence. We hire professional inspectors to look at all major mechanical, electrical, and structural systems.
Re-Negotiate with Seller
If any major issues are found, we re-negotiate with the seller to bring the price down to compensate for the cost of fixing the issues.
Follow us to Part 4 of our series where we discuss the Closing process.
Five Part Series on Our Acquisition Process
- Part 1 of 5 – Research
- Part 2 of 5 – Analyze
- Part 3 of 5 – Negotiate (this post)
- Part 4 of 5 – Close
- Part 5 of 5 – Manage