Continuing ...

So we've qualified for the loan, or at least got all of the documentation in place to do so.  And, we've established our basic criteria for Building, Location, and Demographics (BLD)  Now what? 

We examine P&L's, Proforma, or both.  For properties that look like they will meet our BLD criteria, we will request a Proforma first, and if they'll allow it, a copy of a P&L statement for the most recent year. 

Here, I'm going to make a leap in judgment for you, my Buyer client.  I'm going to assume we're going to look at those properties that are under professional management.    Are those the only good "deals" out there?  No!   But we need to examine the difference between the Proforma from the Agent and the P&L Statement from the Property Management company.

And, this is where I'll earn my fee -- in the effort that I expend performing Due Diligence.  Am I the only one that is going to do this work?  No, I'm going to do this in concert with your CPA or tax advisor, and with you. 

And I'm going to go over the P&L Statement line by line, and transfer those numbers into my own investment analysis software, then I'm going to "recast" the P&L as a Proforma and Projection on the property, for a 7 to 10 year holding period. 

And, I'm going to either prove or review for believability, every single line on a P&L on for those properties which we agree are adequately interesting that you might want to make an offer on.     

Once we make an offer, and we negotiate a price, we make sure we'll request of Seller that we'll need access to all documents to allow us to complete our "Due Diligence" exercise. 

So what if we can't get a P&L statement out of the Seller?  We move on. It's just that simple, unless there are compelling reasons to do otherwise, we're not looking to buy someone else's headaches at market value.  We're seeking a sound, real estate investment that will crank out at least 7% per annum hard cashflow (more can be better, but aware of your tolerance for risk -- there is a balance between cash flow and risk, i.e. the greater the cash flow the greater the risk, usually).