This post originally appeared on tBL member blog SVN Southland Commercial Blog and is republished with permission. Find out how to syndicate your content with theBrokerList.

Mountain Dew, one of the PepsiCo soft drink brands, had a very popular marketing slogan, “Do the Dew”. This slogan was started over 20 years ago. Even though you may not be a soda drinker (good for you), the slogan is one many people remember instantly.

This catchy “Do the Dew” slogan got me thinking about commercial real estate and the importance of  due diligence.
Proper due diligence is critical to fully understanding what you are purchasing as a buyer. In a real estate context, it refers to a specific number of days in a contract for a buyer to investigate and inspect the property. This process is to ensure that the buyer is satisfied with it before they close on the property. Thorough due diligence will allow you to uncover any negatives and sometimes positives associated with a transaction. These positive and/or negative findings may allow you to improve your negotiations. Due diligence will certainly assist you in your underwriting of the asset PRIOR to purchase. This ensures the investment mirrors your assumptions and analysis as accurately as possible. Surprises are great for birthdays and Valentines day, but are NOT what you want in commercial real estate investments.

Due diligence is the buyer’s responsibility, no one else’s. Caveat emptor, (buyer beware) can be no truer than during this critical phase of the purchase process. The process of due diligence in commercial real estate is detailed and lengthy. It could never fully be covered in just one blog post. My intent here is to stress the importance of due diligence. Having a commercial real estate advisor with experience, like an SVN | Southland Commercial Advisor, can help you navigate this process. Personally, I have been selling, buying and developing commercial real estate for over 20 years. That being said, I am constantly tweaking and adding to the due diligence process. Rules changes, land use and zoning issues change so you must constantly be on top of those adaptions. I have had new rules associated with landscaping replanting requirements kill a deal. Furthermore, due diligence procedures vary from product type. What you might do for an office building investment would be different than a student housing multifamily property.

As you may have heard, “you make money when you buy, not when you
sell”. I whole heartedly believe this is true. The best way to ensure that you have this outcome is through proper due diligence. At SVN | SouthLand Commercial, we use a proven system of checklists to guide our clients through the process. Again, it is the buyer’s responsibility and decision as to how much due diligence they want to do, but we always try and point out the potential obstacles. In my opinion, a real estate advisor that can help you navigate this thoroughly and successfully is more advantageous than one that can forward you an email asking if you want to ‘buy this’. I’d love to have your business. I’ll earn it. Give SVN | SouthLand Commercial the opportunity to show you how we can execute your real estate strategy.

In future posts, we will be discussing specific due diligence checklists and areas buyers need to focus on. Most importantly, having a trusted team of advisors to help you in the process is crucial to success. I can be part of your team, contact me today to find out how I can help.

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Carlton DeanAbout Carlton Dean – Carlton is a SIOR and a CCIM, two of the most respected designations in the commercial real estate industry. He has nearly 20 years of experience in the industry and is Managing Director for SVN | SouthLand Commercial, which is based out of Tallahassee, Florida and serves clients throughout the Southeastern US. Click here to view his full profile and listings, or if you would like to contact him, you can call him at 850-877-6000 ext. 101 or email him at [email protected]. You can also follow him on Twitter.

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