Due Diligence is Crucial for Distressed Properties by Kevin Sanz, CCIM, MSIRE

Posted on February 10, 2022

Commercial real estate priced below market value can offer investors an opportunity to acquire property at a discount and yield potentially higher returns in the future. However, it is critical for investors to look under the hood of these distressed properties to assess their performance and fully understand the rationale behind the purchase price.

For example, a property may be underperforming due to deteriorating physical conditions that a current owner does not have the cash flow nor the time or resources to repair. This means those tasks and expenses would pass to the new owner and eat into returns. Alternatively, the current owner’s life circumstances may require an immediate sale and cash raise, perhaps due to a divorce, death or business dissolution. In these circumstances, the risk to prospective buyers and the expected return on their investments may be negligent.

Navigating these challenges requires the experience of professional real estate advisors with the knowledge and contacts needed to thoroughly assess a property and the financial, tax and legal buyers may face.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.

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