STEP 1: We Qualify Your Business

We welcome, new investors, non-accredited investors, and well-seasoned investors/syndicators to become clients with The Real Brokerage Family. But before we begin shopping the real estate market for investment opportunities,

the first step is to always to talk to a loan officer to get pre-approved!

 Investing in rental properties, especially multifamily homes where an investor can live in one unit and rent the others, offers a dual benefit of generating rental income while potentially reducing personal living expenses. This strategy can be very attractive for new investors looking to enter the market while optimizing profitability.

Schedule a call and we can walk you through the process.

STEP 2:  Identification and Origination

• We will discuss investment criteria and begin our search by finding properties that meet investors' criteria.

• We will provide access to canvas properties on foot and by car to identify potential acquisitions

• We will network with other owners, brokers, lenders, lawyers, and asset managers to identify potential properties.

• We will comb through legal records for pre-foreclosures and other distressed assets to identify motivated sellers

• We provide direct mail and cold-calling campaigns to property owners (in and out of state).

STEP 3: Underwriting

We provide preliminary underwriting reports to take the identified properties and subject them to Financial Institutions-Level Analysis. Activities in the underwriting phase include:

• Obtaining financial documents for the property including operating statements, bank accounts, balance sheets, and selected invoices. 

• Constructing a financial proforma to model a property’s occupancy, rental income, expenses, valuation, and cash flow. 

• Working with lenders and investors to identify the initial terms of the required debt and equity raise. 

• Performing demographic market and submarket analysis. 

• Validating proforma assumptions by analyzing market conditions and demographic data. 

• Calculate key return on investment metrics (Internal Rate of Return, Equity Multiple, Cash on Cash Return, Gross Rent Multiplier, and Debt Service Coverage Ratio.

• Working with the seller and their representatives to negotiate the initial terms of the deal. 

• Placing contingencies so investors can continue the process while safeguarding earnest money deposits as needed. 

STEP 4: Due Diligence

The typical purchase and sale contract for a commercial property includes a specified period for the buyer to perform additional due diligence on the property. We assist with validating the initial underwriting assumptions to verify that the property’s physical condition is as advertised.

Typical due diligence activities include:

• Interviewing the property manager about maintenance issues and the property’s track record of repairs.

• Order a valuation report from an appraiser.

• Ordering technical reports like a phase 1 environmental site assessment.

• Walk the property to test all of the faucets, electrical sockets, and light switches to ensure functionality

• Working with structural engineers to verify that the property is safe for occupancy.

• Verify zoning to ensure the property is approved for its intended use.

• Provide all access to the investor's team for assessing the level of renovations, needed to be performed and complete the budgeting process for them; If any is required 

• Assist with the review of all transactional documentation to ensure there are no major issues.

Upon completion of the due diligence process, investors should have a high degree of confidence that the property is in good working order. If any surprises are discovered, the sales price may need to be renegotiated or, if the issue is big enough, the investor may walk away. If everything checks out, the transaction is ready to move into the closing phase.

STEP 5: Closing

The closing stage is a relatively short one time-wise, but there are a significant number of tasks to be completed. The purpose is to finalize the details of the transaction and to sign all of the necessary paperwork to legally transfer ownership of the property to the buyer. Key closing activities include the following:

• Finalize pricing on the debt and equity capital. Get a commitment letter from the lender.

• Complete a title search and purchase title insurance on the property

• Draw up loan closing documents

• Sign all closing documents

• Transfer the funds to the closing agent

Once the funds have been wired and the documents have been signed, the property’s title has changed hands and it is now in the possession of a new owner. But, this does not mean the transaction is complete.

For context, it usually takes about 60-90 days to get a transaction from identification to closing. 

Interested In Learning More?