Physical Due Diligence - The LAST Step Before You Buy By Monte Lee-Wen At Isnare.com Ezine Articles

Now we come to the fourth and last part of our Investortours' Due Diligence Process - the Physical Inspection of the Property. That's right ...we save the inspection of the physical aspects of the property until the very end.

Most inexperienced Commercial Investors will make the mistake of diving right in to the property inspection. We realize it is so tempting to get out there and inspect the property ... and the issues are obvious and simple to figure out. However, we suggest you first check Due Diligence steps I-III. Market : Financial : Tenant

Don't even bother to look at the buildings until all three previous steps in the Due Diligence process are complete ... here's why.

- If the Market is tanking ...
- If the Financials won't give you the ROI your investors seek ...
- If the Property is saddled with a load of bad Tenants ...

It doesn't matter if it is the Taj Mahal itself ... Don't Buy It.NEVER, EVER fall in love with a Property's condition or amenities. How it looks does not determine its performance as an INVESTMENT..

The property's physical beauty and flawless construction will be overwhelmed from the start. It will not PERFORM for you or your investors. The Market, Financial or Tenant challenges will cripple performance every day you are an owner.

However, once you have assured yourself:

- The local Market is in the right phase for this Asset Type, Asset Class and your Business Plan ...
- The Financial Analysis shows a reasonable chance of hitting your Return On Investment targets ...
- The Tenants appear to be good enough to form a stable income base under your management ...

Inspect away ... and let's make sure the structure of the Property is sound before you buy. With Physical Due Diligence as the LAST step you will have all the bases covered.

Just remember, you don't have to do the inspecting yourself. Rule #1 Applies: "Commercial Property Investing is a Team Sport", especially in Due Diligence.

When you have a quality Local Property Manager on your Team, they will not only do a full walk through of the property - giving you a unit by unit breakdown of needed repairs and expense projections - they will also do a Lease Audit, verify the Seller's tenant screening procedures and - here's the best part ...

They will do all of this at NO CHARGE to you.

Think about that for a moment. It costs you nothing up front to get this kind of detailed reporting from an experienced Property Manager who is completely familiar with the Local Market. They provide the service because it gets them a head start on taking over the day-to-day management of the property. This is one of the cleanest win:win partnerships in business.

Recap:Resist the urge to dive right in to Physical Due Diligence ... save it until last ... AFTER you have checked the Market, the Financials and the Tenants.
Use your Team to get the job done on time and under budget.

To your investing success.

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