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Opportunistic Acquisitions - Due Diligence and Deal Analysis

US banks and other lending institutions’ failures to provide renewed funding to the real estate market has caused a tsunami of developers and property owners defaulting on their loans. When a property owner defaults on its loan, the bank must internally pledge additional capital to adhere to government regulations, which only enhances the liquidity problem for each party involved. Therefore, banks usually sell the collateralized note or property at a substantial discount to anyone that is able to pay for the property in cash.

 

HIC, through its relationships with banks and brokers, is exposed to thousands of these opportunities, many of which will yield extremely attractive CAP rates, as they are being acquired at below replacement cost.
 

During a due diligence period, HIC generates a picture of each and every aspect of the proposed acquisition, so that we may provide our investment members with an accurate and detailed picture of the transaction.


Due diligence and deal analysis include:

  1. Location
  2. Market absorption
  3. Competition
  4. Title Examination
  5. Cost to complete/Repair Costs
  6. Easement and other rights/obligations
  7. Profit margin
  8. Cash Flow Analysis
  9. Appraisal of as is and finished/stabilized project
  10. Lien positions of subordinate liens
  11. Physical inspections
  12. Meetings with governing municipalities
  13. The creation of exit strategy
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