Proposal to Purchase Real Property

Before making your proposal to purchase real property you must perform your due diligence.  Part of the due diligence process is determining if the property is profitable.

To determine if a property is profitable you need:

• At least one year of actual income (commercial numbers are yearly based).
• What the occupancy percentage of the building is (many lenders will not loan if the building occupancy level goes below 85-percent.
• An annual cash flow of $25,000 per $1,000,000 asking price (this is a good bottom line.

When making the offering to purchase, you should include the following clauses:

• Is based upon buyer receiving suitable financing of a fixed interest rate of x% or less.
• Is based upon buyer receiving all verifiable financials from the seller within XX days from the acceptance of this offer.
• Is based upon verified structural integrity of the building from a building inspection report created by a licensed building inspector.
• Is based upon the property being valued at or / less than the agreed purchase price.  If the purchase price exceeds appraised value the property buyer will have the right to lower the price to match the appraised value or terminate this agreement, without penalty.

 
Note:  the offering price should always start at 10 - 15 percent below the asking price.
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