Step-by-Step Process for Buyers
Here’s an overview of Realty Yield’s start to finish program for buyers.
Step 1 (Open Dialogue)
We start by discussing your current situation, real estate investment goals, risk profile and timeline.
We’ll provide an accurate overview of the current market and go through a question-and-answer session as needed/wanted.
Step 2 (Strategy + Action Plan)
Once we understand what you want to achieve, we work with you to formulate a realistic strategy to achieve your future goals for return on investment. This stage includes:
- Financial analysis of your current holdings, if applicable (you first need to know where you stand)
- Return on investment models comparing various purchase and/or 1031 exchange scenarios
- Property type analysis (weighing the pros, cons, risks, variables, etc. that affect your portfolio)
- Finance/mortgage strategy (your best use of debt/leverage)
- Ownership structure decision plus asset and personal liability protection
- Define roles (our role and your role) clarifying who will do what, when and how
Step 3 (Property Search, Initial Screening + Pre-Offer Due Diligence)
Once you give us the go ahead, we begin a comprehensive search for suitable properties. We not only have access to the properties listed on the open market, but also many "silent sale sources." We pre-screen candidate properties to find the best matches for your criteria.
Our pre-screening includes valuation analysis, investment/return forecasts and tax implication analysis. We investigate any potential title or transfer issues.
We inspect candidate properties to get a fix on their physical condition, review documents related to the properties and analyze comparable sales to “reality check” asking prices. We research rental rates for like-kind properties to see if a property’s rents are too low and if a seller’s rent forecasts are too high.
We investigate seller motivations and interest among other buyers in the marketplace. We do a lender review and feasibility analysis of lending options available to you.
Then, we produce a written narrative for you ranking your purchase options with pros, cons and considerations specific to your comfort level.
Step 4 (Acquisition Play, Financing and Closing)
If you decide to proceed, we formulate an acquisition strategy to see that the property is bought at the best possible price and terms. And of course, the submitted offer will include all necessary contingencies allowing time for due diligence items that may not have been completed during the pre-screening process.
Key items in the Purchase & Sale Agreement include:
- Contingencies for professional inspection-s, environmental/soil, comprehensive document review, regulatory use/development issues, title exceptions, appraised value, etc.
- Applicable property performance and/or maintenance benchmarks (minimums) to be maintained and/or achieved during the contract period
- Specific contingency language pertaining to the amount and terms of acceptable loan needed
- Guidance regarding the appropriate use of financing leverage and ultimately the direct arrangement of the best available financing for your particular situation
- Support at closing including "settlement statement" review prior to "signing"
Step 5 (Post-Closing Strategy + Ongoing Asset Management)
The long-term success of your property investment must be maximized through proactive asset management (NOTE: asset management is not the same as property management) – see this website’s section... “How I Help Landlords Cut Costs and Optimize Their Return on Investment.”
It’s not enough to “buy, hold and hope." Part of our complete service as your buyer’s agent is getting your new investment off on the right foot with a solid long-term asset management strategy.
The compounding effect of even modest annual net operating income growth has a dramatic effect on your property’s long-term returns and future value. But growing your net operating income is a proactive and continuing process. Sadly, far too many owners allow the long-term potential of a good purchase to erode, sometimes within a handful of years.
Our goal is to keep you from becoming one of those ill-fated buyers as part of our Post-Closing Strategy services.