Many steps go into closing every deal we acquire. I’ll break down the phases below so you can better understand what happens once we have a deal under contract, and we are working to close on it. Throughout the closing process, coordination across several parties is crucial to ensure all aspects of the deal are covered. Thankfully, we work with professionals and our attorney team is fantastic. With today’s current market conditions, closing a deal from contract to close in 60 days is fairly normal. We like to have options to extend closing because there are a lot of moving parts and accuracy is critical so, at times, we extend closing by 30 days to ensure everything is completed to our standard.
Once we get a deal under contract, we order title work from a national title company, which typically takes two to three weeks to get back the initial title review. We then, with our attorney, go over the title review and send comments back to the seller for corrections we might need them to address.
At the same time, we also send the title work and our comments to our lender’s counsel to see if they have any comments. Guess what? They typically do! Title comments typically go back and forth for a few more weeks between us, the lender’s counsel, the seller’s attorney, the title agent, the zoning official, and the property surveyor. If the title is not clean and all added title endorsements are not 100% accurate to our standards, then we can’t close on the deal, so it’s imperative to get it right.
Once we are under contract, we start the bidding process, which takes about two weeks to determine the lender we will work with. Then the selected lender will order a zoning report (a three-to-five-week turnaround time), environmental conditions report (a three-to-five-week turnaround time), and property inspection reports (a three-to-five-week turnaround time). We also hire a surveyor to develop a new survey (or update a previous survey) to ensure property lines and all other legal property identifiers are shown and accurate.
Currently, surveyors are backed up, typically short-staffed, and have a lot of work, so their timeline to complete the first draft runs about four to six weeks. In addition, for the surveyor to sign their final survey, which is required for closings, the surveyor needs a copy of the final title policy with endorsements and a final zoning report to include with the survey. As you can imagine, it’s a fun game of cat and mouse as each vendor wants the other vendors’ final reports so their report can be the most accurate.
Due Diligence Phase
Our team and management company go through extensive due diligence as soon as we get a deal under contract. If you are interested in reading more about our due diligence process, please visit the knowledge center on our website and type “due diligence” into the search bar.
We also need to work with the seller to get property level reports, identify a day that closing works for all parties involved, and prepare for the takeover day with our team. It’s a very important day because we start interacting with our customers, and our management company is physically taking over property operations.
Some sellers are easy to work with during this transition, and some are not. If a seller is easy to work with, then the closing process can be smooth and typically done within 60 days. If a seller and their team are difficult to work with, then this process can run longer.
We strive to close every deal within our initial projected timeline. Some deals will require a longer timeline to close for variables that need to be addressed and resolved. We hope that you as our investor can understand if a delay happens, it’s for a good reason and we are ensuring everything is 100% accurate for our investment.