What is Deal Acquisitions?

One aspect of real estate investing that prevents majority of people from investing in real estate is Deal Acquisitions.

Deal Acquisitions is the process to purchase real estate properties. The main components involve market analysis, sourcing properties, analyzing the property to validate if this property aligns with your goals, portfolio, criterion, and submitting an offer.

Market Analysis

A key aspect of Deal Acquisitions is taking a closer look into your target market(s). Market analysis is critical for the success of any business, and some companies spend millions of dollars on market research. The reason is purchasing a property or constructing one takes time and capital, and one wrong decision can be detrimental to the company.

Market analysis is seperated into two sections: Macro and Micro.

Macro analysis consists of Gross Domestic Product (GDP), Population, Rental Demand, and Employment. GDP indicates if the economic activity of the city or province is growing at a rate faster or slower than the national average. Analyzing the population of the city, allows an investor to review if the city is growing and if so, whether or not this growth is sustainable. Demographics in terms of average age and household income, assist an investor in ensuring this meets their criteria. Rental demand is key in determining if wide spread housing development is occuring or planned to begin, which could hinder the potential for rental properties. In addition to this analyzing vacancy, job growth, whether there are multiple industries in the area and if businesses are expanding into the area. Lastly, Landlord and Tenant laws play a role into detemining if someone would like to invest into a specific city or province.

Where Micro analysis incorporates transportation and the physical location of the property. A property on or near main transportation routes provides a better tenant experience and attracts more prospective tenants. In terms of property location, the walk score, crime rate, proximity to hospital, schools, and grocery stores play an important role in determining which area of a city you want to invest in. In addtion to taxes, tenant profile, and if this area is experiencing gentrification all contribute to the potential of rental property demands and values.

Combining both the Macro and Micro aspects of the market will provide a clear view of how this particular market or city is performing. It allows a real estate investor to detemine if this is the city to invest in, based on their portfolio, goals, and risk tolerance.

Sourcing Properties

The search for the next property requires dedication, consistency, and perseverance, to name a few. Reason being, you will review hundreds of properties and come across a dozen properties that fit within your criteria, and of these you may close on one property. As you can see, this is a time consuming process and requires you to change your mindset in order to not get discouraged and to get back up and do it all again. With the right power team members, this process can be greatly streamlined to improve efficiency and increase the chances of turning a lead into a successful opportunity. The Deal Acquisition team works diligently amongst our team as well as with realtors, sellers directly, and any other deal sourcing methods we have to find the right deal for our investors.

Property Analysis

Once a property is found that meets our market criteria, it is time to take an in-depth look at the property. This property analysis involves reviewing the current financial situation of the property, such as asking price, current rents, current expenses, and reviewing various metrics that assist in determining if this property is worth pursuing. The current financial situation of a property provides a good starting point for analysis. While reviewing the expenses, it is critical to review if the expenses recorded are within a range you were expecting. Note: not all expenses are properly documented. The next step is to do an analysis on the property while looking into the future (ie. one (1) year into the future). This includes finding ways to reduce expenses while increasing the income of the property.

Many new investors experience "analysis paralysis", which refers to individuals who over analyze a property, situation, or outcome and as a result, unfortunately do not proceed with a prospective property. One aspect of this is fear. This fear can be mitigated by changing your mindset and understanding all the risks, and detemining which risks you are comfortable with. Property analysis can be another time consuming process, but with the right processes, analyzing tools, and knowledge, this can be a streamlined and a relatively quick process.

Offer Submission

Once a property is analyzed and it mets your criteria, an offer needs to be generated and submitted. The offer process involves adding an offer price, timelines, and conditions based on your analysis into a standardized form which some people call the Agreement of Purchase and Sale (APS). During the market or property analysis you may find that specific items need to be included in the offer to assist in closing, such as financing or performing engineering assessments. The offer submission is an important step that takes all the previous work and combines it into one document that is binding between the buyer and seller, so care must be taken when drafting these documents.

One aspect of Deal Acquisitions that is important to this group is finding ways for us to give back to the communities and families. This not only involves providing safe and clean housing for members of the community but also in the form of providing all children in a building with backpacks, for example. Deal Acquisitions is much more far reaching than just analyzing a property and market!

If you have any questions or would like to chat with us, please contact anyone from CMI and we be happy to help!

Fraser Pollock

Deal Acquisitions