From the course: Real Estate Analysis Foundations
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Deal considerations - Microsoft Excel Tutorial
From the course: Real Estate Analysis Foundations
Deal considerations
- The first thing is the purchase price. Now purchase price really determines your profit or return potential. Because if you get the purchase price wrong, and for example if you overpay, there's going to be very little that you can do during the investment to really get what you could have gotten from the investment. So determining the right purchase price is critical because it can't be too high or you would miss out on returns but if you make it too low or offer too low you may never have gotten to acquire the property in the first place. Now another consideration related to the purchase price that often affects an investment are what's called contingencies. These apply more often in commercial investments, for example if you're buying a warehouse where there was some industrial uses before and there is a huge risk of environmental contaminations that may involve some very very costly cleanups. If that's the case and there aren't any other buyers that you're competing with, you may…
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