We recently asked Real Estate Development Expert Peter J. Connelly for some tips for doing due diligence prior to buying commercial real estate.

1. Review three years “operating statements (aka income and expense or profit and loss statements) for the asset.

2. Request and review three years of “rent rolls” to verify changes in occupancy, rental rate growth (or reduction), concessions, expense reimbursements, etc.

3. Require the owner to provide “Lease Summaries” for the current tenants so that you will not be required to review entire lease documents and any amendments thereto.

4. Review the Property Appraiser’s last three years tax assessments and valuations and real estate taxes to determine the municipality’s view of the property’s value.

5.Obtain five “confirmed” sales of similar commercial properties within the subject property’s submarket. Compare capitalization rates and prices paid per square foot paid to determine if the property meets or exceeds the “initial” investment parameters of the purchaser.

For more Real Estate Development and Investing Tips visit Peter on Linkedin: http://www.linkedin.com/in/peter-connelly-real-estate

Author's Bio: 

Bruce Cadle is the owner of Cadle Media Group, a Boutique Public Relations and Internet Marketing company located in Central Florida.