Commercial Purchase agreement

General Real Estate Investing
1

Hello,

I am currently in the process of completing a two- six plex deal from an owner that is not using a realtor. I know that I should tie-up the property with a purchase agreement or letter of intent. My question is how do I do this??? This is my first deal also and I’m not sure if I should write up the agreement myself, print one off of the internet, ask my accountant, or retain an attorney to do so.

I live in Ohio. I just read “best damn commercial real estate” and am definitely going to incorporate some of the authors ideas in the drafting of the agreement, but I don’t really know where to start with the contract…,

Then there is the matter of escrow to enforce the agreement because something of value has to change hands right? So do I retain a professional for this or do we do everything ourselves (buyer/seller) and just put it in writing? Thanks in advance for any responses.

2

oh man…

first, don’t write up any agreement yourself.

what are the details of the offer?

what are the numbers?

numbers first - you get to play around with these - it’s fun.

a contract to purchase a piece of real estate is legally-binding. this is serious.

with all due respect, you don’t sound like you’re ready for that.

ASSUMING you’ve done all the work with the numbers and let’s just say YOU THINK it’s a good deal, heck a GREAT DEAL…

consult a REAL ESTATE ATTORNEY if you’ve never done this before.

do not “print one off the internet”.

this post is really too vague to give you better feedback.

3

A few hundred bucks on a good lawyer can save you much more money than he charges you and many headaches.

4

Here are some of the details…
Purchase price $365K,
Owner financing $37k 5yr interest only balloon
Contingent on inspection, financing
What else do you want to know?

5

Gross rent?

6

$5005/mo 12units with rent ranging from $400-$440 unit.
$465 is standard in the area for the same type of apt.

7

In the context of your question (should I retain a professional?), the numbers are irrelevant.

Commercial real estate transactions do not offer anything close to the protections offered by residential transactions. For your first deal at least, you would be best served by a competent RE attorney. I don’t know the specific process in Ohio, but in states that normally don’t involve attorneys for small deals, you might pay an experienced commercial RE agent a small fee to help you behind the scenes.

Or, do both.

8

In all due respect, hire an agent because your money is at stake. You do not want to save some money and risk getting sued in court by the seller.
The author who wrote the book did not buy real estate and sign the purchase contract herself. Hire an agent or lawyer to represent you and protect your interest.

9

In all due respect, hire an agent because your money is at stake. You do not want to save some money and risk getting sued in court by the seller.
The author who wrote the book did not buy real estate and sign the purchase contract herself. Hire an agent or lawyer to represent you and protect your interest.

10

Based on your numbers, even at $465/per unit per month, you should really only paying about $279K for this place. That’s the 2% rule at work. I think $365 is a bit too much. My 2 cents…

Also, get a RE lawyer.