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    Letter of Intent Notes

    Uploaded by

    Joe Schmo
    The document outlines key points to include in a letter of intent (LOI) for a commercial real estate transaction. An LOI establishes important deal points between a buyer and seller, such as financing contingencies, environmental studies, closing dates and timelines. It prevents spending on attorneys before agreement on deal points. A LOI for a lease would specify price/lease amount, lease/feasibility period terms, required studies, zoning requirements and expected utilities. It is common to negotiate parking spaces for tenants in an LOI. The document provides examples of normal timelines for commercial property improvements and outlines key information and documents required from buyers such as financials and background information.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Letter of Intent Notes

    Uploaded by

    Joe Schmo
    80 views10 pages
    The document outlines key points to include in a letter of intent (LOI) for a commercial real estate transaction. An LOI establishes important deal points between a buyer and seller, such as financing contingencies, environmental studies, closing dates and timelines. It prevents spending on attorneys before agreement on deal points. A LOI for a lease would specify price/lease amount, lease/feasibility period terms, required studies, zoning requirements and expected utilities. It is common to negotiate parking spaces for tenants in an LOI. The document provides examples of normal timelines for commercial property improvements and outlines key information and documents required from buyers such as financials and background information.

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    Letter of Intent real estate training and notes

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    The document outlines key points to include in a letter of intent (LOI) for a commercial real estate transaction. An LOI establishes important deal points between a buyer and seller, such as financing contingencies, environmental studies, closing dates and timelines. It prevents spending on attorneys before agreement on deal points. A LOI for a lease would specify price/lease amount, lease/feasibility period terms, required studies, zoning requirements and expected utilities. It is common to negotiate parking spaces for tenants in an LOI. The document provides examples of normal timelines for commercial property improvements and outlines key information and documents required from buyers such as financials and background information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    80 views10 pages

    Letter of Intent Notes

    Uploaded by

    Joe Schmo
    The document outlines key points to include in a letter of intent (LOI) for a commercial real estate transaction. An LOI establishes important deal points between a buyer and seller, such as financing contingencies, environmental studies, closing dates and timelines. It prevents spending on attorneys before agreement on deal points. A LOI for a lease would specify price/lease amount, lease/feasibility period terms, required studies, zoning requirements and expected utilities. It is common to negotiate parking spaces for tenants in an LOI. The document provides examples of normal timelines for commercial property improvements and outlines key information and documents required from buyers such as financials and background information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 10

    Letter of Intent

    Ask listing agents if they are working with any other LOIs?

    Highlights deal points.

    Financing contingency, environmental studies, dates, timelines, etc. Main deal points between
    buyer/seller or landlord/tenant. It’s prior to the contract.

    Feasibility period in Commercial is equal to option period in Residential.

    Independent Consideration in Commercial is same as Option Money for Residential (typically not
    refundable in Commercial)

    Commercial LOI’s prevent both seller/landlord and tenant/buyer from spending funds on real estate
    attorneys before deal points are agreed upon.

    LEASE DEALPOINTS:

    Price/Lease Amount

    Terms of lease or feasibility period for transaction

    Closing dates, studies required, zoning requirements (most cities will provide letter about correct zoning
    for property), utilities expected (laundromat needs larger piping for water) etc.

    You can always negotiate with landlord for your tenant to get their own parking spaces.

    “Build to Suit” process:

    1) Locate Property
    a. In LOI add property must pass “Environmental Phase I”
    i. Contingent to Utilities to the site

    Credit Review/Qualification

    Financial for last 3 years, proof of funds if paying in cash.

    Tax returns for last 2 years

    Bio (where did you come from, what’s your experience)


    Deadline

    Provide a deadline to respond to LOI. Don’t put 24-36 hr day like residential. Listing agent needs time to
    qualify buyer, think closer to 2 weeks to 30 days/1 month.

    Financials

    1) You will need CPA stamped financials not computer generated forms from Quickbooks.
    2) IRS Tax records for at least two years
    a. Will ask for personal and business IRS records be prepared to supply both.
    3) BIO – Many landlords and sellers will want a complete background on their potential Buyer or
    Tenant.

    Feasibility Time line required (pre contract)

    (Broker should have a team (tenant/rep) , general contractors who do buildouts, space planners,
    electricians, plumbers, painters, architects, engineers, ada, liquor license, zoning person)

    Normal timeline (dry cleaner e.g. ) going into shell condition metal stud building.

    1 month – architect, drawings, planning

    Feasibility time line - ~45 days+, land takes longer (6+ months), industrial vacant building (depending on
    environmental)

    When contract is drafted by broker or by real estate attorney, redline the contract (we are looking for
    anything that is not customary or standard), don’t practice law, [HVAC warranty for first year, $500 flat
    annual fee if any issue arises after)…..

    Agent commission fees are typically ½ at signing and ½ at rent commencement (start).

    **EVERY LANDLORD AT END OF YEAR HAS TO RECONCILE EXPENSES TO TENANTS, THESE CAN BE FOUND
    AND ASKED FOR IN THEIR “RECONCILIATION STATEMENTS”.
    e.g. 2,000 sq ft * 24+7$/sq ft ($7 is triple net)

    $62,000/yr

    $5,166/mo

    3% bumps, from year to year

    Year 1 24 to 24.72

    Year 2 – 24.72*.03= 25.46

    Year 3 –

    BISNOW
    Improvements

    Avg pizza place - $18/sq ft for improvements (given after project completed and CofO given with
    receipts)

    - Different areas pay different sq ft payments for finish out.

    Commercial HVAC - $10k-$15k


    Ginger example:
    UCC

    UCC Search shows any equipment tied to the building that may have a lien on the property and you may
    assume it if you purchase property without doing a search.

    TXR-1942 Form for Critical Dates in Commercial Contract

    Deed type for purchase: Seller wants a special warranty deed, buyer wants general deed. Seller wants
    their time of ownership covered, buyer wants general deed which goes back all the way in history.

    Property Condition: underground storage, hoa, flood zone, annexation zone,

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