There’s an old saying in commercial real estate that at Leahy Properties we are very familiar with, “if you can’t finance it you can’t sell it.” This really swings both ways whether you’re a buyer or a seller.
If you’re selling a property and if you want to maximize your return then keeping accurate records of your revenue and expenses is paramount. Too often, a property owner will fail to report income in order to reduce tax liability or fail to keep accurate expenses on a property.
All property on a loan in excess of $250,000 must be appraised by the bank. Being that the appraiser will value the property based on either (or combination of) the income approach, a sales comparison approach or the construction cost, reporting actual revenue is paramount. It’s common for the appraiser to ask for a profit and loss, rent roll or copies of rents and any schedules from tax returns in order to verify income.
Another thing to keep and maintain are common due diligence items that you would have done or received when you were buying the property. It’s common that a purchaser will ask for a survey, original title work, any environmental reports, copies of leases while the title company will require receipts for any work done to the site for the last 12 months along with lien waivers.
When you are buying a property the process works in the reverse where you want to ask for the items above. Additionally, you will need to meet bank requirements and provide them with a personal financial statement and 3 years of business and personal tax returns. The personal financial statement will need to be provided to the bank annually, so it’s a good idea to ask for one in excel format so you can update it in a few minutes each year instead of having to fill out a new one from scratch.
So, if you’re looking to invest in St Charles County Commercial real estate, Lincoln County Commercial real estate or Warren County Commercial real estate give us a call. We specialize in investment property and land for sale throughout the St Louis Metro area.