In this episode, co-hosts Adam Carswell and Michael Flight explain the process of making an offer on a Triple Net (NNN) property with what is called the Letter of Intent, or Purchase Offer. They discuss the key information to include in an LOI to make sure the investor and property owner are clear on the stipulations of the offer. Michael and Adam also point out and define terms, such Purchase Sale Agreement, Single Asset Entity, Estoppel Certificate and many more, educating listeners through a step-by-step breakdown of an LOI. They wrap up this episode with an emphasis on why they aim to prepare investors for these Triple Net investment deals with a clear letter of intent.
Timestamped Shownotes:
01:48 – Adam Carswell and Michael Flight, CEO and co-founder of Liberty Real Estate, introduce the show’s topic of making an offer with a Letter of Intent
02:23 – What is a Letter of Intent (LOI), or Purchase Offer?
03:18 – What is a Purchase Sale Agreement?
03:44 – Why is it important for the LOI to specify the terms agreed to between the tenant and the investor?
05:02 – Why do investors need to check if state and local laws specify that LOIs are binding or non-binding contracts?
06:19 – Why should investors not undervalue, or “lowball,” their Triple Net (NNN) investment offers to tenants?
08:10 – What are some factors to consider when forming a strategic LOI on a net lease property?
09:24 – How do Professional LOIs appeal to sellers and what do they specify?
10:08 – Why is it important to have a relationship with the selling broker of a Triple Net investment?
11:25 – When should investors visit the NNN property before purchasing it?
13:23 – How are net lease properties similar to bonds wrapped in real estate?
14:17 – How can investors learn about Triple Net real estate beyond this podcast?
15:21 – What basic information should be included in the LOI?
15:57 – Why should LOIs have an expiration date?
16:42 – What contact information should be included in an LOI?
17:29 – What is a Single Asset Entity (SAE), or Single Purpose Entity (SPE)?
18:09 – What is included in the subject line of the LOI?
19:42 – What is the Assessor Parcel Number (APN)?
20:04 – What information should be included in the majority of the LOI specific for the offer?
21:54 – Why should investors ask for a Phase 1 Environmental Inspection?
23:05 – Why do investors have to look over all leases and accompanying documents?
23:32 – What is an Estoppel Certificate and why are they so important?
24:42 – What financial information should investors ask for in LOIs from property owners?
25:12 – What is a Reciprocal Ease Agreement?
25:46 – Why should investors ask if the tenant has any future plans for the Triple Net property?
26:27 – Why do investors need to check for proper zoning of NNN properties?
27:34 – Why specify the waiver time on an LOI?
28:20 – Why include the closing cost for the net lease property?
28:30 – What is proration and why do some regions prorate properties differently?
29:15 – Why specify the involvement of real estate brokers in the LOI?
30:01 – Why do investors want the right to sign a purchase agreement to another entity?
30:18 – Why do tenants need to know whether investors are involved in a 1031 Exchange for a net lease investment?
Key Points:
1. Factors of a Letter of Intent (LOI)
2. Net Lease investments have tangible and intrinsic value as a hard asset
3. Importance of Knowing State and Local Property Laws of Triple Net Location
For more information contact us here and mention Nothing But Net or simply NNN:
For more information on:
Liberty Real Estate Fund LLC (https://libertyfund.io/)
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