The purchase (acquisition) and sale (disposition) of an investment property are pivotal moments in the overall life-cycle of an asset and can easily be the difference between a successful or failed investment. Furthermore, even for the most seasoned investors, it is a transaction that occurs infrequently and that most investors have little real world practice with. Working with an experienced advisor can not only reduce the anxiety level of such a transaction for the client, but can also add tremendous value to the transaction.
Our Acquisition Services start with first getting to know the client and where the acquisition fits into their overall investment goals. Each client has unique investment criteria, risk tolerance, and personal preferences. Some clients are risk adverse and seeking stable and reliable income while others are willing to take on more risk in search of strong appreciation in asset value. Many clients are comfortable with the use of leverage to boost their returns, while others are not. Additional considerations may include holding periods, liquidity needs, tax planning, geographical preferences, capital requirements of assets, and management intensity just to name a few. Once we've defined the objectives and investment profile of the client and asset, the search process may begin.
Finding suitable investment properties to acquire entails an extensive search and often times screening through hundreds of properties just to find a handful that closely match the defined investment objectives. The resulting properties then require thorough underwriting and analysis. Our team uses current market information and experience to create detailed Discounted Cash Flow (DCF) models and investment summaries that allow our client's to make informed "apples-to-apples" comparisons among potential assets and remove ambiguity surrounding potential investment returns.
Once specific properties have been selected, our team will handle the negotiation of the purchase price and deal terms and will collaborate with your legal and tax advisors to draft the Purchase & Sale Agreement (PSA) and to determine the best ownership structure suited to your particular needs.
The final phase of an acquisition is one of the most important steps in the process, whereby the purchaser performs due diligence investigations to assess the economic, physical, and environmental condition of the property, review leases and service contracts, interview tenants and service providers, and revise the underwriting of the property to account for any disparities discovered during due diligence. The primary function of due diligence is to reduce risk and learn as much as possible about the property, tenants, and local market, as well as to provide maximum clarity around past and future cash flows. It is also an opportunity for a purchaser to become acquainted with future tenants and service providers. The principals of Arete Real Estate Advisors LLC have extensive experience in leading due diligence investigations and are able to work collectively with your legal, tax, and engineering advisors to make the process a smooth and seamless experience for our clients while reducing unnecessary risk.