Are Due Diligence Inquires Picking Up?

Hello Tomas,

Where I am -Raleigh nc area( stronger area than most) I can't even get the opportunity to do due dilligence as they have shut dwn lending on land.

Ex: Owner has vacant -debt free 5 acre commercial parcel on major roads with all utilities avail. Has excellent credit, balance sheet and can show nice cash in bank.They want to get a 100k LOC -the answer is NO.

Land value takes the hardest hit in a down market so it is not surprising. Real estate recovery must begin with housing. The Housing bubble created an oversupply and before the economy stabilizes the overstock REO's will need to be selling off at steep discounts. The government realizes this and the full force of recent programs announced, plus private dollars moving into this market, and the need for quick decision making should move the 3.5 million REO's off of the books quicker then many believe. Really great deals for first time home buyers. I am seeing this begin to take shape and am feeling a little optimistic.

Hi Tom,

Thanks for suggesting I join this group. I attended the SF BOMA luncheon a couple of weeks ago where Gavin Newsom was the speaker. He said that during 2007 there were $6.7 billion worth of commercial building transactions. The city budgeted for 40% of that number for 2008 realizing that was going to be a bad year. It turns out that thought through November, the sum total was around $1.1 to 1.2 billion with little activity expected to be accounted for during December. The general tone of this meeting as well as the one in January is that 2009 is expected to be a "fasten your seat belts kind of year" with a daunting amount of financing coming due with vacancy rates soaring.

I think performing property condition assessments makes good business sense for not only buyers, but sellers as well as long term owners. I include the following points in my discussions with prospective clients when marketing building condition assessment services:

• Buyers benefit by obtaining a more in-depth understanding of the condition of the building(s) which they are considering purchasing. This can be valuable when negotiating the final purchase price, obtaining financing and planning for future capital expenditure requirements.
• Sellers benefit by proactively having their own due diligence report available as part of the tender document which helps expedite a potential buyer's review of the property and establishes a willingness to be transparent with regards to a building's condition. This proactive transparency usually expedites the sale as it reduces the buyer's due diligence workload. It also establishes an upfront willingness to share information with potential buyers, which may or more often times, is not included in other tender documents which the buyer may be reviewing.
• On-going owners can benefit from due-diligence reports by establishing better on-going maintenance and future capital needs for budgeting purposes. These same reports can also be used in future tender documents should the building be put up for sale after a few years and the current owner wishes to publish what progress has been in made in either correcting deficiencies or upgrading the property since the report was issued.

I've deviated from your initial subject but wanted you to know that I'm trying to talk up all aspects of performing building condition assessments. Hope to see you soon.

Sam

Another opportunity in 2009 will be servicing government projects, performing Facility Condition Assessment and Modernization reports.