REM 500 Lecture Notes - Lecture 7: Due Diligence, Title Insurance, Market Research
Document Summary
What happens at this stage: assess for due diligence quick cost estimate, contract negotiation relies on written contracts, developer must already had, formalize agreements as commitments (ie. proposals, completion, income, appearance, schedule, community impacts, stakeholders (includes financial commitment) When negotiating, have high tolerance for ambiguity and uncertainty . Conditions of closing and responsibilities of both parties (ex: who pays the broker?) Due diligence rights (ex: right to visit site to take soil samples) Escape clauses for deal breakers uncovered during due diligence. Tool: feasibility study (market study and investment analysis section) Ideal project: value > cost to get loan to cover all (including development fees) and have a large contingency. Finding a permanent lender and securing a loan commitment. Sometimes it is better to pay a higher rate because more conditions = construction lenders less willing to lend. Takeout loan (ie. 2-3 years) conditions: plans, leasing requirements, title insurance, land title survey.