Due diligence

General Real Estate Investing
1

Hi,

I am getting ready to buy two new office condos. These are about 6 months old. Below are the high level details.

  1. Both have 3 year lease with good tenant.
  2. Cap rate is about 9-10%
  3. New construction.
  4. Good neighbourhood.

I am planning on doing the following for due deligence considering it is the new construction.

  1. Review lease.
  2. Get the property inspected by professional.

I do not have any realtor in between I am dealing directly with owner. Is there anything else I should be checking.

2

Check the zoning and see if you can buy adjacent air rights like Trump and build a massive skyscraper. ;D

3

Interesting, I did not think of that. I will start working on this.

Seriously, I was wondering

  1. How the leases are transferred to new owner. Do you need to draw a new lease or just have an addendum to original.

  2. Tenant insurance names the owner as additional insured. How that changes to new owner.

  3. Who makes sure that all the stuff is properly transferred. Is it closing attorney or the new owner.

4
  1. Assignment of Lease
  2. You or someone else call insurance company and say your the owner and put me on as additional insured. That provision should be in lease agreement.
  3. Just tell title co. or attorney what you want to happen and how. I would choose closing agent if I were you.

Other things?

audit the leases w/ an accountant shrewd in office condo leases
get inventory list and check it
get building and land inspectors
review all agreements
have a survey done
title search

Anyone else got something?