DUE DILIGENCE HANDBOOK
Real estate financial due diligence is the investigation or audit of the financials of a real property done in preparation for a financial investment. It is essential for basically any commercial real estate acquisition today. There is no such thing as a “small” acquisition that can afford to forgo a rigorous financial due diligence review.
However, evaluating the true value of a retail center, office tower, industrial park or multi-family building is a complex, multi-phase undertaking. From complex lease agreements and expiration dates to insurance costs and estate taxes, a wide array of variables serve to conceal the true value of a property. Analyzing past operations in order to project future property performance is never a black or white endeavor – it can be very grey.
Our 101 Due Diligence Handbook is a starting point for understanding the financial due diligence process. This guide provides a basic overview of the process with a focus on why, when and how it should be done. However, it is not meant to be a comprehensive manual on how to conduct financial due diligence.
Conducting financial due diligence for commercial real estate is tedious, painstaking work. Any decision about the acquisition, management or underwriting of a commercial real estate asset demands a full and impartial understanding of its underlying financial health, which can only be achieved through detailed and thorough analysis. Newcomers and seasoned investors alike benefit most from utilizing a reputable, results-oriented third-party due diligence expert that brings proven methodologies, depth of expertise and industry resources to the process.
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